Buying a home is exciting and stressful at the same time for many homebuyers who try to make everything right to make the transaction as smooth as possible. Homebuyers browse through the listings, compare the homes, and eventually, schedule a visit to see a home. They have probably thought about how much they can afford, and perhaps, checked several online mortgage calculators to determine the monthly mortgage costs, but often it’s not enough to prepare you for home shopping. While many online tools can be helpful and give you an idea of where you stand financially, you won’t know for sure until you have had a lender take a peek at your finances and assess your borrowing power.
Some homebuyers tend to neglect their finances at the beginning and focus on the home search first, but that can be very time-consuming and tiresome without a precisely defined budget. Getting a mortgage pre-approval before the home hunt would immensely help those buyers in their search. Here are some of the benefits pre-approved homebuyers can get:
A Precisely Estimated Price Range
Getting your mortgage pre-approved will give you peace of mind as you’ll know ahead how much you can afford including all other expenses like down payment, legal fees, closing costs, etc. The best part is that you can get pre-approved free of charge at the Lender. Another advantage is that you’ll know how much the monthly payments would be.
Pre-approved homebuyers are usually more confident as they have their finances worked out and know exactly what to look for. Home hunting without a mortgage pre-approval means exposing yourself to the risk of finding a great home, falling in love with it and only learning afterwards that it’s over your budget. On the other hand, I have also seen homebuyers underestimate their finances thinking that they can’t afford a specific home, and at some point, it turns out that they can. To avoid such mishaps and wasting valuable time, talk to a lender first and apply for a mortgage pre-approval.
Interest Rate Perks
Looking at this year and the interest rate increases, it’s clear that changes are quite common in the real estate market. Having a pre-approval means protecting yourself from a volatile market. Lenders will hold the pre-approval interest rate for 120-180 days for you, which simply means that if the interest rate should increase in the meantime, you won’t be affected by it. If it should go down, the lenders will let you borrow the mortgage at the new lower rate.
It Makes You Look Better In The Eyes Of The Seller
Another risk of shopping without a mortgage pre-approval is to lose a home in your price range to a buyer with a pre-approval. Sellers prefer homebuyers who can provide proof that they will be able to afford the home. Why not be that buyer from the beginning? After all, you need every advantage you can get in the market.
A pre-approval will save you from any headaches and turn your home search into an organized process. If you are looking for a home in Brampton, Mississauga, Caledon or anywhere in the Greater Toronto Area currently, we would be happy to help.