When it comes to buying a home, not knowing your budget or how much you will be granted for your mortgage can affect your purchasing power. Mortgage pre-qualification is a key step that every home buyer should do before they start placing offers. So, if you’re not familiar with all the advantages of a pre-approved mortgage, read on as we help you understand how you can get ahead of your competition and avoid costly mistakes from the get go.
Helps You Negotiate Better
What could be worse than finding that dream home, putting in a bid, and then being rejected by the lender or offered a much lower loan amount than the purchase price? Instead, you should know what amount a lender will loan you in advance. Securing pre-qualification ensures that you are provided with a set loan amount that is guaranteed for a specified amount of time. This will help you negotiate better and get the documents ready faster, beating out your competition.
Shows That You’re Serious
A pre-approval will show your realtor and seller that you are serious about buying a home. And when it comes down to you and another bidder, your offer will be stronger than one from a buyer without pre-approval. It tells the seller that they don’t have to worry about the financing falling through, which is an important advantage.
Ensures You Close Faster
When you set out for a pre-approved mortgage, you are required to provide your financial details to the lender. All the supporting documentation you provide for pre-approval is also required as part of the closing process. This allows for a much faster closing and can help a seller choose you over your competition knowing they will have the deal done in a shorter timeframe.
Provides Protection Against Rising Interest Rates
When you have a pre-approved mortgage, you are locked into a specific interest rate for a certain amount of time. This can protect you from any rising interest rates that can happen in the near term. Even if rates rise you will be still given the rate that is outlined in the pre-approval. And even if the rates fall you will be given the best rate possible.
In today’s market, going house hunting without a pre-qualified mortgage can result in pure disappointment. Don’t get beat out on every bid – talk to your Toronto mortgage broker today about the process for getting a pre-approved mortgage.