Getting your mortgage pre-approved has some obvious benefits:
- When it’s done right, you get am accurate understanding of how much home you can afford. That’s important, because of you stick to a plan that you can afford, you take a ton of future stress out of home ownership.
- When you get pre-approved, you lock in rates so that you are protected from any unsuspected rise during the buying process. Again, stress-relieving.
- You tell sellers that you’re a serious buyer, and given how competitive the property market has become, this can be advantageous to you.
- You are not obliged to work with any lender, even the lender who pre-approved you, so there’s really no reason you shouldn’t find out where you stand in the eyes of lenders, and doing so before you start house hunting can make the process way more efficient and way less stressful.
Now that’s all good, but here’s what you need to know about the process to really take full advantage of pre-approval:
- Different lenders act differently. Some pre approvals offer rate guarantee, but don’t look into your qualifications until you go to buy. That could set you up to be rejected when you go to buy. To avoid disappointment, be sure you are actually pre-qualified and not just getting a rate.
- The Devil is always in the details. We offer the best advice available, but in the end, the lenders underwriter has final say on what you qualify for. Lenders always look at what you have for down payment, your employment record and income, your credit rating and your debt load. Accuracy always makes the process and results better.
- How you act after pre-approval matters. Being pre-approved is step one. Maintaining good standing after pre-approval is a critical step 2. If you miss payments, increase your debt or mess around with your down payment money, you could quickly find yourself not approved. This stuff really matters to lenders, so forewarned is forearmed.
- Pre-approval don’t necessarily mean best rate. Getting pre-approved actually costs the lender money, so those costs find their way into your rate. The best rates are often found for 30 – 45 day property closings, so check your rate then and if you don’t like the rate compared to what the market is offering, simply ask the lender to improve it. If they won’t, you can apply with another lender, but remember; your mortgage is never simply about the rate. Terms matter, even more than rate sometimes. When you compare your rate make sure you compare your terms as well, for a tiny advantage in rate may come at the price of better terms, and that’s not a smart decision.
- Let me restate: features and details matter. Not all lenders are created equal and that means that not all pre-authorization is created equal. Every borrower has a unique set of circumstances they are faced with and choosing a lender should always come down to a combination of rate, features and terms. Some people need long rate holds. Others want the deepest discounts available, and some simply want better repayment/pre-payment terms and features in a mortgage. Add it all up and one thing is clear; doing your homework with the help of a great mortgage broker can only improve your experience and your results.
Looking for a mortgage? Wondering if you qualify? Interested in refinancing? Our secure and completely confidential “no obligation” quick-form can give you answers, fast. Find it here.