December 16 2022
Getting pre-approved is one of the best tools at your disposal when it comes to buying a home. As a new homebuyer, you may be wondering how to get pre-approved for a mortgage. Well, you’re in the right place.
A mortgage pre-approval is a commitment from a lender to hold a rate and mortgage product for up to 120 days. If you buy a home within that 120-day period, this pre-approval can convert to a mortgage approval if certain conditions are met. Getting a pre-approval means that your lender has verified your financial stability by reviewing your credit history, finances and other key documents, and has conditionally approved your eligibility for the mortgage. Doing this gives lenders a better sense of your level of risk as a borrower to determine whether or not they will give you a mortgage loan.
Now that you’re familiar with what a mortgage pre-approval is, here are three things you need to know about the process and how to get started.
Getting pre-approved for a mortgage establishes what you’re eligible to borrow right from the start. Having a clear picture of what you can afford saves time and simplifies your home search so that you’re looking in neighbourhoods within budget.
Once you know how much you qualify for and what you’re putting down, you can start planning your monthly payments and budget for other key expenses such as closing and carrying costs. A common mistake many buyers make is forgetting to factor in these additional expenses – getting pre-approved is a great reminder that you’ll thank yourself later for.
As mentioned, your lender will hold your initial interest rate for a 120-day period when you get pre-approved. This saves you from unpredictable rate increases and guarantees that you’ll receive the initial agreed upon rate when you were pre-approved. Adding ease to the process, buyers are able to make a purchase without rushing or delaying the transaction. With interest rates expected to rise in the coming months, getting pre-approved should be a key consideration if you plan to buy soon.
It’s important to remember that pre-approvals are conditional and never 100% set in stone. This means you can be denied final approval if you don’t maintain the requirements set by your lender. To ensure that you meet all of your lender’s qualifications, read our article about the common mistakes to avoid after you’ve been pre-approved. This will help you stay on track, make the mortgage process simple and bring you one step closer to becoming a homeowner. That said, a pre-approval is the best way to ensure you are crossing your t’s and dotting your i’s in the homebuying journey.
Tip: Ensure that your realtor asks for a 5-day conditional offer so that you can get your mortgage approval right after you submit your offer.
At Homewise, we bring the entire mortgage process online – it’s simple, quick and FREE! After understanding your financial situation and long-term goals, our team of dedicated mortgage advisors work with 30+ banks and lenders to find you the best option for pre-approval and lock in a mortgage that aligns with your needs.
Are you ready to get pre-approved for a mortgage? Apply with us in just five minutes here.
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