Why Do You Need to Get Pre-qualified and Pre-approved For a Mortgage?

"Why Do You Need to Get Pre-qualified and Pre-approved For a Mortgage?"

When you are purchasing your first property especially if it is a pre-construction condo – there are many benefits to get pre-qualified and pre-approved for a mortgage before you decide on what you are going to purchase.  Pre-qualifying for a mortgage is very useful when gauging your budget, which can help you narrow down different variables so that your search can be more focused and more likely to succeed.  Once that has happened, and you have found a location within your budget, the next step would be to get pre-approved for a mortgage. 

Getting mortgage pre-approval is a more lengthy process, however it is much more beneficial and forward moving when purchasing a property.   Pre approvals involve credit checks, and verification, completed by the lender and are valid for 90 days.  While the process is a bit more involved to get done, it is the only way to fast track any type of real estate purchase. 

Many real estate brokers prefer their clients to have a pre-approval letter to show proof that funds are attainable.  This shows that you are seriously in the market to purchase, and sometimes there is competition on properties, and having this pre approval letter will be beneficial to you and give you a point in your favour compared to someone who does not have this letter.

It can also help you really determine how much you can spend on your property.  When purchasing pre construction condos, there are wide ranges of options to choose from.  While the pre-qualification of the mortgage can help you narrow down the general price, a pre-approval can help you down to the nitty gritty, and will really put a cap on things.  Working within a budget can sometimes be considered limiting, but having that pre approval can help you and your broker understand better what you can or cannot do. 

Financially, as previously mentioned, getting a pre-approval for a mortgage is beneficial.  Not only are the rates guaranteed for 90 days, but you are also protected by potential increasing interest rates, if you choose a fixed rate mortgage.  This will also help you understand your monthly budget, and your mortgage payments, and really make your commitment clear. 

All in all, I do recommend to all of my clients to get their pre-approval letter prior to seriously starting to shop around for a property, and especially before they seriously consider purchasing a pre-construction condo.  I think that while the process does take some time, it is absolutely worth it in the long run.  You get a better idea of what you can afford, you are guaranteed that rate (should the interest rates increase) for 90 days on a fixed rate mortgage, and it’s excellent to have in case of bidding war emergencies. 

Let me help you understand better the benefits of getting a mortgage pre approval and I promise you will not be disappointed.  

Whether you are a first time buyer, or a seasoned buyer, I can help you understand the current market situation, and the future outlook, and what that means for you.  The condo market in Toronto is booming, and pre-construction condos are always something that is worthy of an investment.  Contact me today and let’s chat!

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