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Due to all the Government Rule Changes, now more than ever do you require a Mortgage Pre-Approval in place before you go house shopping. With having to qualify for your home purchase at the Qualifying Rate of 5.34% for an insured mortgage, you may not qualify for as much as you think. Even if you play on some of the mortgage calculators that are available, they do not take into consideration any consumer debt load you may be carrying. A mortgage pre-approval acts as a proactive approach to a positive outcome and allows you to be better prepared should you need to make a few adjustments to ensure an approval is issued when you submit an offer on a property.
What is a mortgage pre-approval?
A mortgage pre-approval is when a mortgage professional collects and submits your application to a lender for them to review. Should the bank issue a pre-approval, it means that they are prepared to offer you a mortgage when you find a property that meets your needs and your employment and down payment details are verified as per the application that was submitted.
This is the time that your mortgage professional requests that you bring in proof of employment via a letter of employment along with 2 pay stubs and your previous 2 years income as well as proof of your down payment and closing costs. This is where different options between mortgage offerings are explained to you so you can make an educated mortgage decision.
A Mortgage Pre-Approval is usually valid between 90-120 days depending on lending institutions, this allows you time to find the perfect home and take possession before the pre-approval expires. Should it expire, a new pre-approval can be submitted.
The most important aspect of obtaining a pre-approval is that you can go house shopping with comfort and ease knowing you are in the right price range and your realtor will appreciate knowing you are shopping for a home to fit your budget. If you have been considering buying a home within the next 6 months, there is no better time to schedule an appointment to sit down and see what you can qualify for under the new Government rules. If there are a few things that need adjusting, we have the time to make that happen. Here is an easy rule of thumb, for every $20,000 in income you roughly qualify for $100,000 in mortgage money and for every $14,000 in credit card debt you carry cancels $100,000 of mortgage money as does a $450.00 vehicle payment.
There are many different lenders to choose from and each lender offers an array of products and policies. How they calculate your income and what can be used for down payment if any Child Tax Credit income for your children can be used etc. Don’t limit yourself to one bank and their policies, that is where your mortgage broker will shine. If you would like to chat about an upcoming purchase, let’s schedule an appointment by calling 780-244-0505 or apply online at www.mortgagetailors.com