When you’re house hunting, it’s a great idea to know the amount of mortgage you qualify for, your monthly payments, and that your interest rate will be held for a specified period of time i.e. 120 days. This way you can shop within your price range, you don’t have to worry about rates rising, and both realtors and sellers will know you’re serious.
Understand that not all mortgage pre-approvals are equal
Keep in mind that not all pre-approvals are the same and that a pre-approval is not a mortgage approval. Some are just a simple rate guarantee subject to lots of conditions and a later approval. This is a trap that we see many potential clients fall into. It turns out that what they thought they were approved for, and what they actually qualify for, are quite different.
For a full mortgage pre-approval, you need to submit your application and supporting documentation so the lender or broker can qualify you. Your lender or broker should review your documentation, pull and discuss your credit with you, and only then disclose what you would qualify for in terms of a new mortgage. Keep in mind, that sometimes what you qualify for, is not what you are comfortable paying on a monthly basis. We recommend all of our clients determine their potential budget for their new home up front. You will need to consider Strata Fees, Property Tax, Heating and Cable costs, as well as what you can put aside for future home maintenance.
Let a lender comb through the details
Even with a proper pre-approval on a mortgage, it’s a good idea to have a financing condition in your purchase offer as your property will need to be assessed by your lender. A good broker or lender will be willing to review any documentation in regards to potential properties that you may be looking to place an offer on. A detailed review of the Strata Minutes, Property Disclosure Statement, and calls to the insurers if your file will be high ratio should all be a part of their process.
Avoid changes to your financial situation
Be sure to not make significant changes after getting the pre-approval i.e. changing jobs, adding debt or missing payments, co-signing another loan, or using your down payment money. Any changes to your financial situation will impact your pre-approval whether they are good or bad changes.
Contact Team RRP today and get off on the right foot in your home buying journey!
Photo: Los Angeles Times
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