While getting pre-qualified can give you a ballpark estimate on what you can afford, getting pre-approved (whether it’s for a purchase or refinance) is where the real magic happens.

Getting pre-approved means that I have reviewed and assessed your complete financial situation prior to presenting your file to the selected lender for consideration and when applicable, to secure a rate-hold.

A small number of lenders still provide a traditional pre-approval commitment, which is a conditional guarantee that the lender will accept your application if the information you provide is consistent with your supporting documents and your borrower profile meets their lending criteria. However, most lenders are no longer providing a pre-approval where they thoroughly review your supporting documents upfront (as I do) and are instead providing rate-holds. By completing the pre-approval stage with me, we greatly reduce the chances of unwanted surprises that could impact closing your transaction, potentially leading to additional costs/penalties.

Here are three benefits to getting pre-approved:

1. It confirms the maximum amount you can afford to spend

Not only does getting pre-approved make the search easier for you, but helps your real estate agent find the best home in your price range. Temptation will always be to start looking at the very top of your budget, but it is important to remember that there will be fees, such as mandatory closing costs, which can range from 1 to 4% of the purchase price. Factoring these into your maximum budget can help you narrow down a home that is entirely affordable and ensure future financial stability and security.

2. It can secure you an interest rate for 90-120 days while you search for your new home

Getting pre-approved doesn’t commit you to a single lender, but when purchasing a home, it can guarantee the rate offered to you will be locked in from 90 to 120 days which helps if interest rates rise while you are still on your property search. If interest rates decrease during that time, you would be offered the lower rate.

3. It lets the seller know that securing financing should not be an issue

Lastly, when it comes time to purchase, being pre-approved lets the seller know that securing financing should not be an issue. This can be very helpful in competitive markets where lots of offers may be coming in, as it helps to inform the seller that you’re a serious buyer versus other potential bidders who may not have been pre-approved.

Keep in mind, once you get pre-approved, you will want to make sure not to jeopardize it. Until your mortgage application and sale is completed, be sure you don’t quit or change jobs, buy a new car or trade up, transfer large sums of money between bank accounts, leave your bills unpaid or open up new credit cards. You do not want your financial or employment details to change at all until you have closed on the new mortgage (unless you receive a promotion with a pay raise).

If you have any questions or want to begin the process of getting pre-approved, don’t hesitate to get in touch!

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