he average Canadian homebuyer takes 11 months to plan their
purchase, according to CMHC. If you’re thinking about buying in the next
year, our four-part series will explain how you should be dividing your
time.
Part 2: The PreApproval
There
is no better tool to help you obtain a true picture of your housing
budget than a mortgage pre-approval. Unfortunately, less first-time
buyers are taking the time to get one.
According to TD Canada Trust’s First Time Homebuyers report, 91% of
first-time buyers were pre-approved for a mortgage before house shopping
in 2010, and that number fell to 76% in 2011.
There’s no real reason
why less homebuyers should be taking advantage of the opportunity to
get pre-approved for a mortgage – especially if you’re dealing with a
mortgage broker. With one glance into your credit score, we can use the
information to see which lenders are willing to approve you for a
mortgage, at what rate and for how much.
While this approval isn’t
etched in stone – the lender will still want to see proof of income and
other personal details upon approval, and if you’re putting less than
20% down, your mortgage insurer (i.e. CMHC or Genworth) will also have a
final say – it nevertheless gives you a good picture of what type of
funds are available to you, and at what rate.
Not only does this help
you put a more accurate budget together – and ensure your house hunting
endeavours fall within your allotted price range – but, in many cases,
it also allows you to secure the best available rate. Most lenders will
hold their best rate for you for 90 days (and sometimes 120 days) upon
pre-approval. If you don’t find a home within that time (or if you just
haven’t had a chance to start looking) you can obtain another
pre-approval hassle-free.
For the amount of effort it takes to call up
your mortgage broker and obtain a pre-approval (which is close to zero),
it’s definitely worth the added convenience. In many cases, we can do
the legwork online, and have it turned around within a business day or
less.
No comments:
Post a Comment
Your comments are not only welcomed but encouraged. It is not expected that you will always agree with what I have to say. After all, it's an opinion.