Why getting a Mortgage Preapproval is Important

by | May 27, 2016 | Real Estate

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You’ve saved a down payment, you’ve had your credit report checked for any errors, and you’re ready to look at Vancouver Island homes for sale. But there’s something else you should consider doing before you get a REALTOR® booking appointments for you.  Consider getting pre-approved for a mortgage.

Benefits of Getting a Mortgage Pre-Approval

By going to a bank (or two) or a mortgage broker and getting a pre-approval, you’ll put yourself in a good position.

Knowing How Much You Can Afford

Knowing how much home you can afford is important. You might think you’re completely comfortable with paying a monthly mortgage payment of $2000 and your bank might think that $1500 is your ceiling. Just because you get pre-approved for a specific amount doesn’t mean that you have to spend that amount, either. Lenders might be comfortable giving you financing on an amount that you are completely comfortable with. Then again, you might feel like your comfort level is much lower. In terms of down payments, you might think that the typical CMHC 5% down is completely fine, but because of your credit rating, a status of self-employed, or something specific to the Vancouver Island home for sale you’re looking at, a bigger down payment might be a necessity.

Knowing You Can Get Financing, Period

You might think you’ll have any problem getting approved for financing on a home, but until you get a pre-approval you can’t be sure there will be no hiccups. Many people who have tried to buy a home as well as many people who thought they’d sold their home have found themselves faced with financing difficulties that made a deal fall through.

A Stronger Offer

When you make an offer on a home you’re interested in and you don’t have to put a ‘conditional pending financing’ caveat into that offer, you’re in a stronger position than someone who puts in a higher dollar value offer than you. Some sellers would rather not leave things to chance with potential financing snags, so if you get into a competitive situation on an in-demand property, having a pre-approval on your mortgage is like having an ace in your back pocket.

Whether you’ve just started looking at Vancouver Island homes for sale or are still in the midst of lining up your ducks, so to speak, ensuring the financing will go smoothly ahead of time is something that can save you a lot of stress and disappointment once you’ve gotten your heart set on a specific property.

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