Pre Approval

Understanding mortgage preapprovals

One of the most critical steps in the home buying process is ensuring that you are pre-approved for a mortgage before making an offer on any of the homes for sale which you have been looking at. Pre-approval will mean avoiding any number of disasters; in this article we will take a look at what pre-approval is and how it can help you.

The concept of pre-approval is fairly straightforward. It means that a lender has already stated their willingness to allow a buyer a mortgage up to a certain amount, before the buyer has attempted to actually secure that amount. The buyer only has to sign the conditions of the mortgage and that money will be available to them. Pre-approval allows the buyer to eliminate the longest part of the home buying process before looking at the possible purchases in a real estate listing. It benefits the buyer in several ways, as we shall see below.

First of all, pre-approval means that a buyer can spend time looking only at houses that they know they can afford. A pre-approval letter will generally give you a range of house prices that you can feasibly pay, and that means your selection has been conveniently narrowed down. The pre-approval will be based on things such as your salary, outstanding debts, and so on.

Not only will a pre-approval help save you time when it comes to looking at homes, it will also save you time when you are making an offer. A lot of sellers want the deal to go through as quickly as possible. They may have a job waiting for them at their office, or they may have already bought a home somewhere else. Either way, they are looking to offload as quickly as possible. A buyer who already has a bank letter is a lot more promising than one who now has to go through their financial records and find the best mortgage rate.

Pre-approval letters can also act as good bargaining pieces when it comes to buying that condominium. Downtown Toronto, like other areas, has had a bit of a drop in real estate prices due to the recession. Sellers may be willing to negotiate on prices with a potential buyer who can show they already have the money to pay, rather than wait for someone else who has to go through the entire approval process.

Finally, having a letter of pre-approval may just help you secure that dream home. There`s nothing worse than finding a perfect home after weeks of shopping, only to have it bought out while you went through the application process. When you have pre-approval, you can be assured that no other potential buyer will be able to get the money together faster than you can. That means once you find the perfect home, it`s just a matter of signing for the loan.

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Saturday, May 18, 2024