Mortgage Information

Toronto Real Estate, Real Estate, Toronto Rental Information

Why get a Pre-approved Mortgage

August , 2009 ·

When you are purchasing a home, it is highly suggested that buyers get a pre-approval done by a licensed mortgage broker.

You may be asking yourself "why is it necessary?"

The answer to this question is simple; with a pre-approved mortgage you are showing the seller that you are serious about purchasing the house and that if the offer is accepted. You can afford to buy the property off the seller.

If you do not have a pre-approved mortgage then you are simply a ‘risk' to the seller; they are looking at a conditional offer which is based on whether you get the proper financing for the purchase.

This will give you an advantage in buying the house when there are multiple offers being made. A seller is more likely to accept your offer if you have a pre-approved mortgage, compared to another buyer who does not have a pre-approved mortgage.

With a pre-approved mortgage you will know exactly how much you can afford. Best of all when you show your real estate your pre-approved mortgage, it is telling them your price range and from there you will have eliminated a number of homes out of your price range.

With a pre-approved mortgage, the lender certifies that you are financially qualified and creditworthy for a specific loan for an amount up to a specific maximum.

Keep in mind that just because you have a pre-approved mortgage does not mean that you should be spending that specific amount on a home. You have to calculate your expenses; primarily your mortgage payments, utilities and taxes.

Do not forget to budget in closing costs, which are typically around 2% to 5% of the loan. Not to mention moving costs, a good way to move if you are running low on funds is to rent a truck and have a few good friends help you move. You will save hundreds of dollars compared to hiring a professional moving company.

Generally you will find that a pre-approved mortgage will be effective for 90 days from approval. With this you are guaranteeing the financing on the home you may buy and can easily negotiate a house which falls within your budget.

Do not waste time, if you are looking for a house, then you should be getting a pre-approved mortgage today.

Posted by Peter Tarshis on 08/26/2009 02:56 PM