Should I Get A Pre-Approval Before House Hunting?
Let me answer this by offering a hypothetical. Would you like to find the home of your dreams? A house that hits every single check mark on your list. It has the pool, finished basement, and the luxury kitchen. All your wishes have come true. Do you even know if you can afford this house? You should have got a pre-approval!
A pre-approval will let you know how much house you can afford. It will also save you form wasting your time looking at homes you can’t afford. It is free and there’s no obligation. So the questions should really be “Why didn’t you get one?”.
Some Points on Mortgage Pre-Approvals
- Be honest with the mortgage broker. They ar going to find out anyway. Do not hide anything.
- Advice goes only so far. Mortgage advisers can “pre-qualify” you to confirm that you meet general guidelines, but only a lender’s underwriter can confirm that your income, down payment, purchase agreement, property information, credit and debt ratios meet their full approval.
Unless you have a 20 per cent down payment from your own resources, rock-solid employment, provable income, pristine credit, and low debt, then pick a lender that reviews your application and preferably your documentation before granting its pre-approval.
- Appraisals! You may have pristine credit and no problems qualifying for a mortgage however….. The bank will want to know what your buying is worth the money. They will want an appraisal.
- Your actions after pre-approval matter. Beware that missing payments, adding debt, changing jobs, moving around your down payment money or co-signing for someone, among other things, can void your pre-approval.
- Wait! Maybe? Just now you qualify for a $300,000 mortgage. What happens if you wait six months and keep saving?
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