First time home buyers always ahve to go through a high level of uncertainty. Fortunately for you, there’s the Internet which provides unlimited information and answers your questions with various sources such as blogs like this one. Buying a home is one of the biggest decisions you’ll make in your life and with that being said, there’s many potential ways you can trip up. Shopping for your mortgage is a tedious process, but before you begin, be sure to check your credit report and to take stock of your financial situation. Once those steps are taken, it’s time to go through the pre-approval process! But what is the pre-approval process?
Understanding the pre-approval process
The preliminary discussion with a potential mortgage lender helps you get information about the maximum amount they’ll lend you and at what interest rate. Although the pre-approval doesn’t guarantee you the mortgage loan, it does let you:
- Lock in an interest rate - the length of the interest rate guarantee varies by financial institution and usually ranges from 60 to 120 days.
- Estimate your mortgage payment - always a great addition to your budget
- Know the maximum amount of a mortgage - That way you’re not looking for homes that are too expensive
Finding someone to pre-approve you
Mortgage lenders or mortgage brokers are both options for you when looking to get pre-approved. Some mortgage lenders include but are not limited to:
- Mortgage companies
- Insurance companies
- Loan companies
- Credit companies, etc.
Mortgage brokers are the alternative, and rather than lend money directly to you, they arrange transactions by funding a lender for you. Brokers don’t all have access to the same lenders, so the available mortgages vary from broker to broker.
What to bring to the pre-approval interview
When you go in to talk to your potential mortgage broker or lender you should have some information handy such as your identification and proof of employment (current salary or hourly pay rate). If you’re self-employed, be sure to take your Notices of Assessment from Canada Revenue Agency from the past two years. Having information about your other assets like your car, cottage, boat etc. will also help along with proof that you can pay for the down payment and closing costs with recent financial statements. Ask your broker/lender plenty of questions before walking away, that way you’re sure about everything that’s going on.
First time home buyers can sometimes trip up when it comes to making the best choices in the real estate market. If you’re looking at the Niagara housing market, connect with Team Davids. We can help you find a home within your pre-approved mortgage budget and guarantee you the best real estate selection in the region.