I’ve had many people ask why they should get a mortgage pre-qualification or pre-approval BEFORE starting the search for their dream home.
But first – what is the difference between a pre-qualification or pre-approval? Let me explain. I use a mortgage pre-qualification to let my clients know what they should be able to afford based on their household income, current expenses, credit history and down payment amount. A full pre-approval goes one step further, in which, we submit an actual pre-approval application to one of our lenders.
A pre-approval gives you more confidence in knowing you’ll be approved for a specific purchase price when the time comes for you to put in an offer on a property with your Realtor. With a particularly heated housing market, you’ll know if you are able to place an offer above the listed asking price if a potential multiple offer situation were to arise.
With a pre-approval from a lender, we are able to hold onto that interest rate for up to 120 days. This leaves you with no fear of losing out on a decent mortgage interest rate, should the government raise interest rates between your pre-approval date and closing date. Another benefit – if mortgage rates fall before your closing date, so does yours!
If you’re planning on purchasing a home in the future, it may be best to sit down with a mortgage agent so they can advise you on the proper steps to take to put you in a good position when it comes time to search for that home!