Many home buyers in Calgary make the mistake of prioritizing scouting new houses first before processing their mortgage papers. We get it. Buying a new house is exciting. But before embarking on a quest for a new house, home buyers should first discuss their mortgage loan options with a lender or a mortgage broker. This step can give you an advantage when venturing out in buying a physical house.
Getting a pre-approval for a mortgage prior to scouting for a house can open up a lot of possibilities as a future home buyer. Many people opt for a pre-qualification only but a pre-approval has more weight than the former. Pre-qualification only qualifies you for a mortgage but there’s still no guarantee for the approval.
Why Getting Pre Approved Mortgage is Important
While obtaining a pre-approval is more complex than pre-qualification, it offers a multitude of benefits:
1. Pre-approval allows you to find your best budget range.
Talking your mortgage options through with your mortgage broker or lending firm will give you a solid and accurate idea on how much you can spend on a new house. Having an accurate idea on how much mortgage you will be approved will help narrow down your search for a new house.
This also prevents you from going over your budget or setting your sights on a new house that your approved mortgage cannot afford.
2. Pre-approval foresees possible problems with your credentials.
Your mortgage broker or lender will check your credit score and standing to determine how much mortgage rate you will be given. If there are problems with your credit score, they will be able to tell you right away. This saves you the trouble of finding a new house and ending up being denied a mortgage because of your bad credit standing. This also gives you time to straighten out the kinks in your mortgage credentials.
3. Pre-approval entices sellers to sell their house to you.
Whether you are looking for a house in a competitive market or not, having a pre-approval letter gives you more credibility and solidifies your buying standing. Sellers are more likely to choose offers from buyers with pre-approval letters. It gives you more leverage, especially since many home buyers actually skip getting a pre-approval. If you are particularly keen on buying that house, this could well be your advantage over other offers.
How to be Pre-Approved for a Mortgage
Now that we have established the importance of pre-approval for a mortgage, it is time to learn how to successfully obtain pre-approval letter.
1. Look for a good mortgage broker or a lender.
If you want to directly transact with your lender, you have to do your research first on the best firms offering the best mortgage rates. While there’s no commitment in getting a pre-approval, you wouldn’t want to waste your time getting this from a firm you won’t transact with later on when your offer for the house has been accepted.
For those who don’t want to deal with the hassle of looking for a lender, comparing mortgage rates and determining which ones are reliable, your best bet is to hire a mortgage broker. Your mortgage broker will guide you in finding the right lender, choosing the best loan option and getting reasonable mortgage rates. Depending on the services of the mortgage broker, he or she can also get you a pre-approval.
2. Prepare the necessary documents.
The mortgage broker or lender will need access to your credit report. You will be required to give your Social Security number, driver’s license, employment information or verification, proof of income and proof of assets. Your mortgage broker or lender will give you details on what to submit.
3. Your credit score should be high.
One of the credentials to be approved for mortgage these days is a good credit score. A good credit score will also help you obtain lower mortgage and interest rates. If your credit score is below what is deemed acceptable, you will have to shell out higher mortgage rate. Don’t worry because most mortgage brokers and lenders will help you out if you have a low credit score.
Ultimately, a mortgage broker can help solve your common pre approved mortgage problems. If you can’t get a pre approval directly from the lender because of your low credit score, you might want to approach a reputable mortgage broker. These brokers are affiliated with different lenders so they can help you find a suitable lender who can help you obtain a pre-approval.