We’re sure you have heard about mortgage pre-approvals. Brokers (ourselves included) strive to make the pre-approval process as simple as possible and give you the confidence needed to start looking for the house of your dreams. But what exactly is a mortgage pre-approval, and how does it work?
What is Pre-Approval?
First thing’s first, a mortgage pre-approval is very important. It gives a potential home buyer vital information when it comes to the feasibility of their potential mortgage. It outlines whether or not you can afford a particular home. It takes into account the price of the home, your down payment, your income, and your other monthly obligations or debts. If this provided information is accurate, a lender or broker can crunch the numbers and determine exactly what you can and cannot afford, which makes the shopping process far more straightforward for you! After you’re pre-approved, you’ll receive a pre-approval certificate and a rate hold for a set period of time. This is extremely valuable as it can protect you from any rate increases that may happen during the house shopping process.
How Do You Finalize A Mortgage Loan?
It is important to remember that a pre-approval does not mean your mortgage is finalized. After you’ve picked out your dream home and have made an offer, there are a few more steps required before your mortgage loan is ready to go. On top of the signing of legal and lender documents, the information you provided in the pre-approval process must be verified. Proof of income, down payment, and purchase agreements are all needed to ensure your pre-approval leads to an actual approval.
Deciding on Fixed vs Variable Rate Mortgage
We have a blog post breaking down variable vs fixed rate mortgages in greater detail. Fixed rate mortgages ensure that your payments remain the same over the length of your mortgage. Your rate will never change which provides stability and ease of budgeting. Variable rate mortgages fluctuate along with the mortgage “prime” rate that is set out by the Bank of Canada. This can save you money in the long run, but means your payments will vary from month to month. Deciding on which is best for you likely comes down to deciding on whether you’re willing to accept some short term uncertainty in exchange for long term savings.
How Do You Ensure You Find The Best Rate?
Nobody wants to pay too much for anything. This is especially true when it comes to the biggest purchase of your life. You can shop around for the best rates, or you could leave it to the experts! Our number one priority is making sure members of our mortgage family save as much money as possible on their mortgage or mortgage renewal. Contact us today and find out how we can help save you money!