What is a pre-approval: a pre-approval refers to a process where a lender evaluates a borrower's financial situation and creditworthiness to determine the maximum amount they are willing to lend for a specific purpose, such as purchasing a home or obtaining a loan. It is an important step in the home buying or loan application process, providing potential borrowers with a clear understanding of their purchasing power and the terms under which they can secure financing.
Benefits to a Pre-Approval
Clear Budgeting: A pre-approval helps you determine your budget accurately, allowing you to focus on properties or loans within your financial means.
Competitive Advantage: Sellers and lenders see pre-approved individuals as serious contenders, giving you a competitive edge in a competitive market.
Time Savings: With a pre-approval, you can streamline the house-hunting process or loan application, saving time by focusing on properties or loan options that fit your budget and financial situation.
Quicker Transactions: The pre-approval process expedites the loan application process as the lender has already reviewed your financial information. This leads to faster loan approval and closing times.
Enhanced Bargaining Power: Knowing your maximum loan amount and terms, you can negotiate with sellers or lenders from a position of strength, potentially securing more favorable terms.
Confidence and Certainty: A pre-approval gives you confidence in your financial readiness and provides certainty in terms of what you can afford and the loan terms you can expect.
Rate Hold: Your maximum interest is held for 120 days. If rates were to rise, you'll be able to secure your pre-approved rate.
How to get Pre-Approved: Getting pre-approved is quick if everything is prepared beforehand.
Talk to your mortgage broker: Set up an initial consultation with me or a trusted mortgage individual. They will help assess your current financial situation, inform you of the necessary documentation needed, and provide you with the necessary tools to get started
Documentation Submission: Send your mortgage broker all the necessary docs for the pre-approval. This would commonly include: Letter of Employment, Paystubs, identification and/or tax documentation
Pre-Approved in 24-48 hours: From time of submission, you will usually get notified from your broker that you've been pre-approved!