What is a mortgage pre-approval?

A fully underwritten pre-approval is the process of determining whether a borrower meets lenders' and insurers' guidelines for a mortgage. It identifies your lowest cost lender and best mortgage options. It shouldn't be confused with a mortgage pre-qualification, which is a more cursory look at your financial picture. A mortgage pre-approval, done correctly, gives you confidence that you are a qualified borrower. It determines the maximum purchase price you qualify for or how much you feel comfortable spending on your new home purchase. To avoid surprises and elevated costs, it is best to get your mortgage pre-approved first, before you begin shopping for a home.

The Benefits:

The pre-approval process can start up to 120 days before you want to make an offer on a home. It is beneficial to get the pre-approval work done up front, if possible, before dealing with offer negotiations and tight finance deadlines. There are a number of reasons why you would want to get pre-approved:

1. It will speed up your home buying process.
2. It will give you an accurate assessment of the amount of money you will have or want to spend for your property purchase.
3. A pre-approval will show to your realtor and sellers that you are serious about buying a home. The offer to purchase that you present may be stronger than another buyer's offer without a pre-approval. To a seller, a pre-approval means that your financing is less likely to fall through than it would without a pre-approval, and in a competitive situation, every advantage helps.
4. It helps you estimate monthly costs.
5. It protects you against rising interest rates within the rate hold period, usually 90 to 120 days. If rates rise during the period in which your pre-approval rate is valid, you will be given the rate that was guaranteed for the pre-approval. If the rates fall, don't worry - you will be given the lowest rate available.
6. It allows you to compare other lender options with your current financial institution's offer, to ensure you don't pay too much for your mortgage.

The Process:

1. Contact your trusted mortgage professional.
2. Complete a full mortgage application.
3. Provide all supplemental documentation required to prove income, down payment, etc.
4. Book a consultation with your mortgage professional to determine your best, lowest cost mortgage options and review all of your money saving strategies.
5. Receive your mortgage pre-approval letter and certificate.
6. Contact your realtor and find your new home!

Pitfalls of a Pre-qualification:

A pre-qualification is just a discussion, often a series of questions relating to income and down payment, either face-to-face, over the phone, online, or with a mobile app. These questions are best used only to begin initial inquiries about your mortgage qualification. The "results" are just rough estimates. If you haven't provided supplemental documentation and consent for your credit to be checked, chances are you don't have a fully underwritten mortgage pre-approval in place. It is important to note that not all mortgage lenders offer pre-approvals. You will want to confirm with your mortgage professional that he/she can provide this service.

Final mortgage approval:

1. Once you have an accepted offer to purchase, your realtor will provide the signed offer and MLS listing for your new home.
2. Your mortgage professional will update any financial information that has changed, add the specific property details to the application, re-verify your credit score, income, debt, and factor in the particular mortgage product that you have chosen.
3. A property appraisal may be required at this time to confirm that the fair market value of the home supports the purchase price.
4. Your mortgage professional will complete your final mortgage approval!

For a free, no obligation consultation to discuss your mortgage pre-approval options, please contact one of our experienced Winnipeg Mortgage Brokers by phone at 204-954-7620 or by email at save@onelinkmortgage.com.