Take the guesswork out of home shopping, by getting pre-approved for a mortgage first. Knowing how much you can afford, will simplify the mortgage process and make the home buying experience far more enjoyable, allowing you to shop with confidence.

Pre-Qualification vs. Pre-Approved – What’s the Difference?

A mortgage pre-qualification is a quick, easy process. You provide some personal financial information, including your income, current debt and assets. Accuracy is important. Based on the information you provide, you will get an unconfirmed assessment of how much of a mortgage you would qualify for. A pre-qualification can be done over the phone or through myMortgage Toolbox App. There’s no cost or obligation. By using my Mortgage Toolbox, you’ll get a personalized calculation of a home purchase price – it will only take you a few minutes. It’s important to note that a pre-qualification is not a guaranteed mortgage.

A mortgage pre-approval is a more comprehensive discovery in the mortgage process. Either I or one of my lenders will check your credit, confirm assets, verify your income, and certify down-payment sources. Conversely, any issues that arise regarding your ability to qualify for a mortgage are thoroughly discussed with you. At this stage, we build out a budget to determine monthly cash flow and affordability.

Pre-Approvals are not necessarily a guarantee that you will receive a specific rate or mortgage. Thus, it is important not to make any changes to your personal financial situation that may preclude a lender from providing you with a mortgage. For more on things not to do prior to your mortgage closing, read my blog post, “Things Not to Do Before Mortgage Closing”.

How A Pre-Approval Works

Getting a mortgage pre-approval means you’re serious about taking the next step in the home-buying process. This is where we begin to build out an application. I will help guide you through the whole process of purchasing a home.

  • We will discuss your financial strategy and goals, mortgage amount, down payment, purchase price, etc.
  • I will teach you about the various available mortgage options (fixed vs. variable rate, interest terms, payment options, amortization, etc.) and discuss which of them best fits your situation.
  • With your approval, I will start an application. Here is where I will ask you to provide details on your employment status, income, assets, down payment sources.
  • You’ll provide written consent to pull your credit bureau report.
  • I will advise you about the documentation I will need to support your application (income confirmation, down payment confirmation, etc.). You will need to supply documentation prior to me submitting to a lender for a conditional approval of your mortgage. There could be additional conditions added by our lender or default insurer once your application has been submitted. In order to receive an unconditional approval, these conditions must be met.

Pre-approvals are subject to your continued good credit. They are usually good for 60, 90 or 120 days depending on the lender.

Why get Pre-Approved?

  • You’ll save time house-hunting, seeing only homes you can afford.
  • You’ll have a better idea of your monthly payment amounts, as well as how much your down payment will be.
  • Realtors may serve you better because they know you’re serious and ready to buy.
  • When you make an offer to purchase, the seller may be more likely to give it serious consideration because you have a pre-approval.
  • Your pre-approved status may give you more negotiating power with a seller.
  • Some lenders may give you an interest rate lock. That way you don’t have to worry about rising interest rates while you look for a new home.
  • A pre-approval costs you nothing, it’s totally free.

Get your Paperwork in order

A mortgage pre-approval gives you a roadmap. It’s important to be comfortable knowing your mortgage amount, monthly payment and terms of your pre-approval. That’s why it’s essential that you review all your personal finances and have a good idea of your future expenses. Even though you have a pre-approval, you are under no obligation.

In many ways, a pre-approval is a win-win for the borrower, Mortgage Broker, and Realtor. As a licensed Mortgage Broker, I have the fiduciary responsibility to ensure that you are well qualified and are able to afford your new home and mortgage.

Knowing your budget and understanding how much you can afford is important. It’s essential to know your numbers so you can shop for your next home with confidence.

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