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  • Writer's pictureBrandon Nishi

Pre-Approvals: The First Vital Step to Homeownership

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

  1. Clear Budgeting: A pre-approval helps you determine your budget accurately, allowing you to focus on properties or loans within your financial means.

  2. Competitive Advantage: Sellers and lenders see pre-approved individuals as serious contenders, giving you a competitive edge in a competitive market.

  3. 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.

  4. 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.

  5. 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.

  6. 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.

  7. 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.

  1. 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

  2. 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

  3. Pre-Approved in 24-48 hours: From time of submission, you will usually get notified from your broker that you've been pre-approved!

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