Why apply for a bank pre-approval before you start looking?
Firstly, like most REALTORS®, it’s a lot easier for us to help you if we know what your budget is. That way, we can save you time by not showing you properties that don’t fit your wallet. Secondly, buyers who are pre-approved are much more likely to see their offers accepted. In short, as a REALTOR®, we know that if you have been pre-approved for financing, there is a much better chance of the deal going through.
Don’t waste time with homes you can’t afford – this is where pre-approval comes to play. It’s one thing to look at homes for ideas on paint, furnishings and design and another to look at a home in light of affordability. What meets your expectations may not meet your wallet and may mean you have to wait awhile before buying the home of your dreams.
Think of it this way, going shopping without a pre-approval is like shopping without your wallet, it’s a waste of time to you, the Agent’s time, and in many times the tenant or owner occupying the apartment who has to take time of their schedule to be there for the showing.
PRE QUALIFIED VS. PRE APPROVED
There’s a world of difference between these two terms. If you’ve ever been confused by the two, we’ll bring you up to speed on how they differ.
Getting pre-qualified is the initial step in the mortgage process, and it’s generally simple. You supply a bank or lender with your overall financial picture, including your debt, income and assets. After evaluating this information, a lender can give you an idea of the size of the mortgage for which you qualify. Pre-qualification can be done over the phone or on the internet, and there is usually no cost involved.
Because it’s a quick procedure – and based only on the information you provide to the lender – your pre-qualified sum is not a sure thing; it’s just the amount for which you might expect to be approved. For this reason, being a pre-qualified buyer doesn’t carry the same weight as being a pre-approved buyer who has been more thoroughly investigated.
Getting pre-approved is the next step, and it tends to be much more involved. You’ll complete an official mortgage application and supply the lender with the necessary documentation to perform an extensive check on your financial background and current credit rating. The lender can tell you the specific mortgage amount for which you are approved. You’ll also have a better idea of the interest rate you will be charged on the loan and, in some cases, you might be able to lock in a specific rate