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THE IMPORTANCE OF PRE- QUALIFYING FOR A MORTGAGE FSCO License # 12179
THE IMPORTANCE OF
PRE- QUALIFYING
FOR A MORTGAGE
FSCO License # 12179
WHAT IS A PRE-APPROVAL?
Non-binding quote from a mortgage lender
You learn how much home you can afford
You learn the max mortgage you qualify for
You learn what your mortgage rate will be
You protect against higher interest rates
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WHY BUYERS SHOULD PRE - QUALIFY
Saves time – shop in the right price range
Shows your serious => better service
Enhances your offer to the seller
Protects against higher rates
May still benefit from lower rates at closing
Removes doubt, and we can address potential issues or concerns
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WHY IS IT HELPFUL?
Helps target homes in the right price range
Greatly speeds up the approval process
Some buyers have unknown credit issues
Some buyers’ income does not match wants
Some buyers are self employed/commissioned
Purchase may be a rental or second home
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TWO DIFFERENT WAYS TO PRE-QUALIFY
1. FULL PRE- APPROVAL
2. OPINION LETTER
A FORMAL PRE - APPROVAL
Locks in an interest rate for 120 days
Provides a greater sense of comfort
Requires all documents upfront
Application may not be fully underwritten
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OPINION LETTER
Fastest option available
Provided by your mortgage agent or banker
Fewest document requirements
Does not lock in an interest rate
Will benefit from rate drops
Allows buyers to budget
Targeted shopping
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DID YOU KNOW?
No pre-approval is guaranteed
Many lenders do not like to pre-approve
Pre-approved rates are usually not the lowest
Mortgage insurers never pre-approve hi-ratio
Sometimes, no pre-approval is your best bet
Appraisals and inspections are the missing link
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BE CAREFUL – THERE IS NO GUARANTEE
An approval is the real deal
A pre-approval is not property specific
A pre-approval cannot be reviewed by insurers
Your circumstances can change
Some pre-approvals become declines
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WHAT DO LENDERS REVIEW?
Your employment and income
Your potential debt service ratios
Will this home be your primary residence?
Your credit history
Your credit score
The source of your down-payment
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SUBJECT TO FINANCING
The stronger the buyer, the less risk, but….
Be very careful with ‘no condition’ offers
A pre-approval is never a guarantee
Consider a ‘subject to appraisal’ clause instead
Don’t be a lone ranger, ask for help!
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SHARING OUR KNOWLEDGE IS WHAT WE DO!
If you have any questions, please call 416-989-1050 or email [email protected]. Ross answers everyone personally
