Home Buying Process

Home Buying Process

The home buying process shouldn’t start by visiting a bunch of open houses or show homes. It should start with a personalized mortgage plan and include a budget. This is why your first step should be after deciding that you want to purchase a home is to seek a mortgage pre-approval.

What is a mortgage pre-approval?

A mortgage pre-approval does require the same steps as providing income documents, proof of down payment, and a credit report but more importantly it gives you an idea of how much home you can afford and what the house payments will be.

Even if you have a mortgage pre-approval, you can still be denied. This could be due to a loss of employment, going on a spending spree, and racking up debt that puts your ratios over lending guidelines. Mortgage approval is also based on the suitability of the property. A property that could be in rough shape isn’t considered a good investment especially since the mortgage company may have a major stake in the property. They always look at the property as to how quickly could it sell
If you ever default on the mortgage payments. Lenders aren’t in the business of owning real estate, they are in the business of lending money.

What are the benefits of mortgage pre-approval?

You’ve gone through the formal vetting process which gives realtors and home sellers some comfort knowing you are shopping in the right price range and that you can afford the mortgage payments. The mortgage process is also faster for you as you have already provided the necessary documents to gain approval. There will be a check on your employment status and a review of your credit and down payment.

Mortgage pre-approval gives you the necessary information to know exactly how much down payment is required and how much money to close on the property. It also lets you lock in an interest rate in a rising rate environment. The rate hold typically is 120 days and offers protection if interest rates spike. If interest rates drop, lenders will offer you the lower rate knowing you could take your business to another lender if they don’t. This makes for a smooth home buying process.

Mortgage pre-approval can also save you from finding the perfect home, writing an offer, and then finding out that errors on your credit report could make you ineligible for mortgage approval. It gives you an opportunity to clean up any credit issues before you head out house shopping. This occurs with ten to twenty percent of Edmonton home shoppers
Talk to our Edmonton mortgage experts at
Mortgage Tailors to learn more about the mortgage process and what it takes to get you into your dream home.

Categories: Edmonton Mortgage Broker, Mortgage Pre-Approval