How a pre-approved mortgage can help you
Whether you’re planning the purchase of your first or fourteenth home, it pays to obtain a mortgage prequalification certificate (better known as a pre-approved mortgage) from the lender of your choice. Not only does this step provide peace of mind, it also helps your offer stand out from the pack in a multiple-bid situation.
Get a Pre-Approved Mortgage in writing.
Your bank or mortgage lender will examine your current financial situation to determine how much you can afford to borrow, and give you a realistic idea of what your monthly payments would be.
Lock in your rate (which is usually guaranteed for 90-120 days); this protects you in case rates go up. For example, on a $100,000 25-year mortgage, an increase of 1% to the rate would add approximately $72 to your monthly payments. That’s over $800 in a year that could have gone towards something a little more fun, like a weekend getaway. Without a pre-approved mortgage, a sudden increase in mortgage interest rates could mean you no longer qualify for your home. GET IT IN WRITING!
If you find yourself in a bidding war – you will know your limit, thus controlling your urges to bid higher than what you can afford. I don't want client to overextend themselves.
After your offer is accepted, all that’s left for you to do is to send in the property and offer details, along with any other information requested, to your lender and your pre-approved mortgage will be converted into your actual mortgage in a matter of hours.
Obtaining a mortgage can be done via:
- your banking institution or
- a mortgage consultant who can negotiate on your behalf to compare rates and terms from several financial institutions.
A firm offer
Homebuyers with a pre-approved mortgage have the upper hand when they put an offer on the table. And it’s easy to see why. Having pre-approval demonstrates that you’re serious about purchasing a home—you’ve done your homework and have arrived prepared. It also officially addresses your ability to finance the purchase, which leaves no question in a seller’s mind that yours is a firm offer.