Real estate is changing – federally, provincially, locally. Whether due to mortgage qualification changes or the competitive market, knowing where you stand before you begin shopping for the house is not only an excellent idea, but one that puts you in a stronger position.
Make changes.
Do you know your credit score? Regardless of how well you manage your debt load, your financial picture is bigger than this and can impact the amount of money you can borrow. Coupled with the more stringent qualification requirements for a mortgage (the so-called stress test), knowing ahead of time where this stands gives you time to correct bad habits, pay down outstanding balances or save a little more for the required down payment.
Shop within your budget.
Home buying is an emotional process, so why set yourself up for disappointment? Getting pre-approved puts you and your realtor in a position to look at homes only within your budget. To do otherwise opens the door to you falling in love with a home priced beyond your reach.
Strengthen your offer.
Sellers love to know that the offer on the table comes from someone who has already passed the litmus test of financing. Your purchase may still require an appraisal – a valuation that determines if the home’s value matches the amount being borrowed – but an offer with pre-approval brings confidence to the table.
Lock in the interest.
Pre-approval can also lock in the interest rate for your mortgage. The time length of this varies between lenders, so be sure to ask. But if you are concerned about rising interest rates – something that can have a big impact on your payment schedule – this is a worthy consideration.
Getting pre-approved is not difficult nor time consuming. So be a savvy shopper and speak with your financial institution early into the home shopping experience.