You’re on the hunt for a new home and you fall in love with one, only to find out it’s out of your price range. This scenario is all too common and incredibly disheartening. So, how could this disappointment have been avoided?
I generally don’t work with home buyers until they have a pre-approval from a mortgage agent. Whether you’re a first-time home buyer or an experienced purchaser, getting a pre-approval should be the very first step in your home-buying journey.
Why Pre-Approval is Crucial
A mortgage pre-approval is an essential part of the home-buying process because it sets realistic expectations for what you can afford. Without this step, you risk falling in love with properties that are out of your financial reach, leading to unnecessary disappointment.
Here’s why I always recommend starting with a pre-approval:
Know Your Budget: A pre-approval will give you a clear picture of the maximum amount you can afford to spend on a home. This helps you narrow down your search to homes within your budget.
Rate Hold: When you get pre-approved, the lender typically holds your interest rate for 90-120 days. This rate hold can protect you from interest rate increases while you shop for your new home.
Strengthen Your Offer: In competitive markets, sellers prefer buyers who are pre-approved because it shows that securing financing should not be an issue. This can give you an edge in multiple offer situations.
How to Get Pre-Approved
You can get a pre-approval from your bank or a mortgage broker, whichever you prefer. Personally, I recommend a mortgage broker because they often have access to a wider range of financing options through various lenders. However, it’s beneficial to get opinions from both a bank and a broker, as each has unique offerings.
Here’s what you need to do to start the pre-approval process:
Gather Documents: Your mortgage agent will ask for supporting documents regarding your debts, liabilities, income, and credit history. These documents help the agent understand your complete financial situation.
Submit the Application: The mortgage agent will submit your application to a lender for review.
Receive Pre-Approval: Once approved, you’ll receive documentation that includes the maximum amount you can afford to spend, a rate hold, and assurance for sellers that your financing is secure.
Maintaining Your Pre-Approval
Once you receive your pre-approval, it’s crucial to maintain it. Here are some key tips:
Don’t Quit or Change Jobs: Stability is essential. Any changes in your employment status can affect your approval.
Avoid Large Purchases: Don’t finance or lease a new car, leave your bills unpaid, or open new credit cards. Changes in your financial situation can jeopardize your pre-approval.
Stay Consistent: Keep your financial and employment details the same until you have closed on your new mortgage.
Getting a pre-approval from a licensed mortgage agent before you start looking at houses sets you up for a successful home-buying experience. It’s a critical step that can save you time, money, and emotional stress.
If you need a referral for a mortgage agent in Dufferin County, please feel free to reach out. I work with several local agents and would be happy to provide you with their contact information. Let's ensure your home-buying journey is smooth and successful from the start!
Feel free to reach out to me with any questions or if you need assistance with your home-buying process in Dufferin County - specifically Orangeville, Shelburne, Amaranth, Mono, Melancthon or Mulmur. I'm here to help! 🏡✨
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