Why do I need a mortgage Pre-Approval?
A mortgage pre-approval is an essential step in the home-buying process in Canada. It allows potential home buyers to understand how much they can afford to spend on a home and gives them a valuable bargaining tool when making an offer on a property. In this blog post, we will explore the benefits of getting a mortgage pre-approval and why it is crucial for those looking to purchase a home in Canada.
First, a mortgage pre-approval allows potential home buyers to understand their budget. By getting pre-approved, buyers will know how much they can afford to spend on a home and can focus their search on properties within their price range. This can save a significant amount of time and effort, as buyers will only spend their time looking at properties that are out of their budget.
We are always nervous when a client comes to us AFTER they have fallen in love with a property. They've driven all over town looking at homes and then sometimes they have to learn the hard news that their maximum mortgage amount is actually less than was is required to purchase the homes they've been looking at. They've wasted time on their precious weekends and so much money on gas! Knowing your budget up front avoids all of this.
Additionally, a mortgage pre-approval gives buyers a competitive edge when making an offer on a property. When making an offer on a home, a pre-approval letter from a lender can demonstrate to the seller that the buyer is a serious and qualified candidate. This can increase the chances of the offer being accepted and can also give the buyer more negotiating power.
If you and your realtor have a pre-approval from Spire, always reach out to us if you're in a competitive offer situation. We're happy to paper an itemized pre-approval letter to make sure that the seller knows you mean business if you're writing an offer.
Another benefit of getting a mortgage pre-approval is that it can help buyers avoid any surprises when it comes to financing. A pre-approval will indicate any potential issues with the buyer's credit or income that may need to be addressed before finalizing the mortgage. This can help buyers prepare and make any necessary adjustments before they find their dream home.
In this volitle rate market, having a pre-approved rate hold also means that a buyers mortgage payment is a known commodity when they're shopping for a home. Over the last year, rates have moved 1-2% over a very short period of time. If it takes a buyer is working with a tight monthly budget, a rate hold means that they can shop for their target purchase price with a fixed monthly payment in mind.
Finally, getting a mortgage pre-approval can also help buyers save money in the long run. By understanding their budget and making an offer on a property that is within their price range, buyers can avoid overspending on a home, scraping their accounts for additional down payment funds at the last minute, and being burdened with higher mortgage payments than expected.
In conclusion, getting a mortgage pre-approval is an essential step in the home-buying process in Canada. It is a wise idea for any potential home buyer to get pre-approved for a mortgage before starting their home search.
