Are you getting ready to purchase your first home?  Or are you considering a refinance of a property you already own?  There are some basic steps that every borrower can follow to prepare for finding the perfect mortgage.  Over the next few weeks, we will look at Pre-approvals, Down Payments, and Credit Scores.

Rate Hold vs Pre-approval

You have probably heard the term “pre-approval”. Buyers will often be asked by Real Estate Agents whether they are pre-approved before they start to show properties.  This term is deceiving.  In most cases, a home buyer actually has a “rate hold” instead of a “pre-approval”. A rate hold will simply keep the lowest rate for any deal happening in the next 4 months.

Documents

The only way to be sure if you have a pre-approval is if your Mortgage Broker has collected, examined, and verified all of the required documentation.  This includes proof of income, personal taxes, down payment and current mortgage information (in the case of a refinance or renewal).

Even with a pre-approval of your documentation, a lender will have to approve the property.  We will use an offer, MLS Listing, and in some circumstances an appraisal when the time comes.

Early Analysis

It is wise to see a Mortgage Broker at least 6 months before the closing date.  If there are any issues that need to be tidied up, 6 months will allow the time we need to collect the correct documentation and make a mortgage application stronger.  Once all of your documentation is verified, a Mortgage Broker can advise you on the appropriate purchase price that you would realistically qualify for.

In addition, a good Mortgage Broker will make sure you understand the monthly mortgage payment amounts.  Costs to consider are Property taxes, Water taxes, Insurance, and Utilities, to get a more accurate picture of the true cost of owning a home.  It’s better to be prepared than surprised when it comes to owning a home!!

If you have any questions about applying for a new mortgage, feel free to call or text Jenni at 613-551-0639