In the search for your dream home, you want to be able to act fast if the perfect home comes on to the market. If you have a mortgage preapproval letter handy, you can make an offer on a listing right away. Mortgage preapproval can make the daunting task of purchasing a home that much smoother. All it takes is a little preparation and patience, but it can make you more attractive to sellers and speed up the home-buying process. Read on to learn more about mortgage preapproval in Ottawa and how to use it to your advantage:
Prequalification vs. Preapproval
Prequalification and preapproval are not the same things. Prequalification is a faster process and does not mean you have been approved for a mortgage. It is something that most real estate agents require buyers to get before starting the home buying process. This is to help ensure that they are only viewing homes that they can afford and to strengthen their position as a buyer. Preapproval means you have qualified for a mortgage loan and that you can make a certain dollar amount offer on a house when you are ready.
During the preapproval process, your mortgage broker examines your credit and gives you an actual dollar amount that you are approved for. It can also give you an idea of what kind of interest rate you will receive. Having a conditional commitment to a loan amount will give you an advantage with sellers and you’ll be able to jump on a listing right away. Negotiations will not begin until sellers and their brokers know you are qualified for financing. It’s also a great tool to know exactly what you can afford and it helps you and your agent look at houses that fit into your budget.
Mortgage preapprovals unfortunately come with expiration dates, but don’t feel the need to rush into making an offer because that date is coming up. Purchasing a home may be the biggest transaction of your life, so take your time with it.
Mortgage preapprovals come with hard inquiries into your credit history, and that can hurt your credit score if you have to do multiple credit checks within a short amount of time. Do your best to time your preapproval application with your financial readiness to go out and purchase a new home.
If you have any questions about mortgage preapproval in Ottawa, or if you are interested in beginning the preapproval process, contact The Mortgage Advisors today.