Many new buyers hit the ground running with great anticipation to find their new home. It's an exciting time! In many cases buyers have not taken the time to sit down with a mortgage broker or representative from bank to find out what they are actually pre-approved for. In some instances a bank has given the new buyers a 'rough' idea or loose number of what they 'might' be approved for. I have witnessed deals fall apart due to financing conditions not being met, because clients have been mis-led or have received inaccurate advice on the mortgage process. Here are a few helpful suggestions to make sure your deal doesn't fall apart before it even begins and you lose out on that dream home you had your heart set on.
How to Obtain a Mortgage Pre-Approval:
Do your research:
Talk to a mortgage specialist to determine what your options are. Most people think of banks first, however, you might get a better rate through another lender. This could be a mortgage broker or private lender. You may even want to consider non-traditional lending options. Your REALTOR® can give you excellent guidance on how to get access to financing that meets your needs.
2.Complete an application:
Request a mortgage application from your preferred lender. You will be asked about things like your employment and credit history, living expenses, outstanding debts or obligations, total down payment available, and various other questions. This will determine your eligibility for borrowing funds and what terms your lender may be able to offer.
3. Submit your documentation for finalization:
You will need to provide certain documentation for your mortgage application, including proof of income or verification of your down payment. These will be required before your mortgage pre-approval can be finalized. Your lender will let you know exactly what they need in order to process your application.
4. Obtain a copy of your finalized pre-approval:
Once you have submitted all necessary documentation, and your pre-approval has been finalized, you need to obtain a copy from your lender. Your REALTOR® can use it as a negotiating tool when making an offer on a property. (Make sure you find out how long your lender will guarantee your rate for, in case the negotiation process takes longer than usual.
Now that you understand the importance of pre-approval, here are a couple quick tips to help you through the process of getting pre-approved:
For your comfort and peace of mind, make sure to meet with a professional that you trust when you are looking to get pre-approved.
If you’re ready to start searching for your new home, it’s best to begin the pre-approval process as early as possible.
Before your pre-approval, it’s a good idea to clear up as much of your existing debt as possible. When you meet with a lender, your credit score and current debt will be reviewed.
No two mortgage pre-approvals are equal. If you’re unsure after meeting with a lender, it’s always worth it to get a second opinion and see if you can find a better rate elsewhere. A pre-approval doesn’t mean you’re stuck with one lender. However it does mean that the rate you are offered by that lender will not change for 120 to 160 days.
Find out of your pre-approval is firm or only subject to purchase rather than conditional to employment and credit checks.
Applying for a mortgage pre-approval is a totally free process that can save you a lot of time, stress and frustration down the road. Before you find your dream home, make sure to consult with your lender so you know what you can afford and what you should be looking for with your new home.