Before you start getting serious about looking at those MLS listings or reaching out to a Realtor, be sure you get a mortgage pre-approval first. While it may seem like a complicated or unnecessary process, the time and frustration it saves is well worth every minute, trust us…we’ve seen it all! Mortgage pre-approvals are for your protection; you’ll have more confidence knowing what properties are within your budget, what your mortgage payments will be, and you’ll also get a good idea of your interest rate when you do make your big purchase. Further, mortgage pre-approvals can speed up the buying process; if you’ve already gone through all the financial paperwork to get pre-approved, then it can mean a quick turnaround time between putting that offer in and getting it accepted!
How do pre-approvals work?
Once you’ve researched the bank, credit union or (certified!) mortgage broker that you think you’ll want to work with, they will start the process by asking for your financial information. They need to know if you are a risk or not and if they should lend you vast amounts of money. You’ll need to gather up proof of your finances, including employment records, bank statements, investments, loans, debts, bills, and so on. They will also review your credit score and determine if they should approve you for a mortgage, and for what amount. This pre-approval is not a legal mortgage document; think of it more as a guideline.
Your pre-approval “to do” list:
✔ Shop around: There are lots of lenders who want your business, so make sure you get a mortgage that’s a good fit for you. While online pre-approvals may be tempting, it’s best to talk to real financial professionals in person.
✔ Get it in writing: Don’t accept a text message or verbal agreement as proof of your pre-approval, be sure you get a formal letter and be sure you understand the contents thoroughly.
✔ Find a reputable, experienced real estate sales rep: Be sure to tell them about your pre-approval so you’re all on the same page when it comes to finding suitable, affordable properties.
✔ Resist the urge to waive the financing condition: Although you’ve been pre-approved, it’s not legally binding and it may no longer be valid if enough time has lapsed. Further, your lender will need to do a formal appraisal of the home, which means the mortgage amount may need to be changed. Financing conditions can be a safeguard step to double-check that your financing will still go through.
✔ Keep to your financial routine: During the time that you’re looking at properties, try not to make any big purchases, quit your job, miss a loan or debt payment, and so on. If your finances are in any way disrupted, it can mean that your pre-approval is withdrawn and that you’re no longer able to get a mortgage.
✔ Retain the services of a real estate lawyer: Your home or cottage purchase is a big investment, so don’t skip out on having legal representation who will have your back at all stages of the process.
As you can see, mortgage pre-approvals are a big deal and easily worth the time and effort. It gives you, your Realtor, your lender and even the seller that extra peace of mind knowing that your finances are in good order and that you’re one step closer to getting your mortgage loan finalized and getting those keys in your hands! With any real estate purchase or sale, it’s also important not to skip out on working with a real estate legal team. At Ares Law in Parry Sound, we’re the legal representatives you want on your side; it’s our job to make you our number one priority and ensure that all your bases are covered. Call us today at 705-746-6444; we’re here for you.
