Pre-approval: what it really means

Early on and even before you start home shopping , you need to determine the price range that suits you. If you plan to finance your purchase with a mortgage loan, sit down with your lender or mortgage specialist to discuss your needs and get mortgage pre-approval. That way, you know exactly how much you can spend on your new home.

• Pre-approval means that your lender commits to giving you a mortgage loan up to a specified amount at certain terms and conditions, including the interest rate.
• Pre-approval are only valid for a specific period.
• Pre-approval doesn’t lock you into the mortgage. You are still free to pursue other arrangements, including getting a mortgage loan through another bank instead.

The benefits of having a pre approval letter with you before starting the home hunting are numerous since it gives you advantage over those home shoppers who have no clue on what their factual financial limitations are.

Imagine falling in love with a home, making and offer only to find out later that you are not eligible for such amount?

Or even worse…
Competing with other buyers over your dream home, to find out the vendor accepted the other buyer’s offer JUST because they were already pre-approved.

It does happen a lot.

Understandingly, any vendor will favor a buyer who is prepared with a letter from the bank.

If you are planning on buying soon, please make sure to get pre-qualified BEFORE starting your home hunting. You never know when you will come across the home of your dreams. Remember, the mortgage pre-approval letter is free and you can obtain it within 24 to 48 hrs from your mortgage specialist.

So, what does a pre-approval means?

To the buyer: The certainty of a fixed amount you are eligible to spend.

To the seller: The certainty that the buyer has been qualified by the bank, that he’s a serious buyer and he means business.

If you need some advise on how to find a good mortgage broker, contact me here. I’ll be happy to supply you with more info.

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