Milton Real Estate - Katherine Barnett, Broker

Getting Pre-Approved for Your First Mortgage

  • Katherine Barnett
  • 22 June 2016

Have you ever wondered what it means to get pre-approved for a mortgage? Well, it’s quite simple really – before you actually buy a house or even make an offer, you should find out from your chosen lender exactly how much of a home loan you will qualify for.

Knowing this number in advance can save you a lot of time once you begin house hunting as you won’t end up spending hours driving to and from and touring homes that are out of your price range. It will also save you from the disappointment of falling in love with a home only to learn that you can’t afford it.

Any broker or financial institution that offers mortgages can pre-approve you for a home loan. They will take your earnings and other financial information into account to determine how much you qualify for. While many of these lenders offer handy mortgage calculators online, it is important to remember that these are only meant to give you an estimate. Once you are ready to actually begin house hunting, you’ll need to make an appointment to meet face to face to get officially pre-approved.

Why should you get preapproved?

Of course, it’s possible to start shopping around for a new home without preapproval, but there are many reasons that we recommend making pre-approval one of your first steps:

  • It will let you know exactly how much you can afford.
  • It indicates to your realtor that you are serious about making a purchase and helps them weed out homes that are out of your price range.
  • It will save time – both for you and your realtor.
  • It will give you better negotiating power – if you find a home that you love, you’ll be able to put in an offer right away.
  • It locks in your interest rate.

How to get preapproved for a mortgage?

When you’re ready to begin your hunt for your first home, it is time to make an appointment with your lender. Some people choose a bank that they are comfortable with, while others go to a broker or get a referral from their real estate agent. There are advantages to each, so you must decide what is right for you.

Be honest with whomever you are applying for pre-approval. You will need to bring in documentation to prove your earnings and your assets.

It’s a good idea to shop around a bit. There are different types of mortgages and interest rates may vary somewhat between lenders. Take the time to get educated about the type of mortgage that you want.

How long does my preapproval last?

So you’ve been pre-approved and were able to secure a really great rate. Congratulations!

Most pre-approvals are good for 120 days before you have to re-apply. If you find a home within that time, you’ll get either the lender’s current interest rates or the rate you were quoted – whichever is lower. So if the rates go up while you were shopping, you’ll get the rate on your pre-approval – if the rates go down, you’ll get the lower interest rate.