What is Pre-Approval About?

Are you prepared to purchase a home?

Before you embark on the journey to find your perfect home, you must grasp the mortgage pre-approval process.

This step is particularly beneficial if you intend to buy a home within the next 90-120 days. Being pre-approved for a mortgage indicates that you have consulted with a lender who has assessed your income and credit score, confirming your eligibility for a loan to acquire your new home. Remember that this is not a binding contract; the lender will make a final decision based on the appraisal of the property and various other factors. Nevertheless, it places you in a favorable position as you begin the home-buying journey and signals to sellers that you are a serious buyer. Let’s delve deeper into the pre-approved mortgage process:

What exactly is a pre-approved mortgage?

A pre-approved mortgage represents a preliminary loan agreement between you and a lender for the prospective real estate purchase.

When should I initiate the mortgage pre-approval process?

If you have accumulated savings for your down payment and have earnestly started exploring properties or identified a property you wish to purchase, it’s time to seek pre-approval.

How can I determine the amount for which I should be approved?

When seeking mortgage approval, evaluating your monthly household income is essential.

Most lenders suggest that housing expenses should not exceed 32% of your monthly income, although this may vary in urban areas like Toronto, where real estate prices are higher.

Housing expenses encompass your mortgage payment, utilities, and related taxes.

There are numerous benefits associated with securing a pre-approved mortgage. The primary advantage that many individuals recognize is that they gain a clear understanding of their financial boundaries and what they can afford.

Before purchasing their home, they already have a clear idea of their spending capacity. Additionally, it gives you an advantage in negotiations, as sellers are more likely to take you seriously when presenting a pre-approval letter.

Be clear, be confident and don’t overthink it. The beauty of your story is that it will continue to evolve, and your site can evolve with it. Your goal should be to make it feel right for right now. Later, it will take care of itself. It always does.