A pre-approval is a crucial step in the home-buying process as it gives you a clear idea of how much money you can borrow and what you can afford when purchasing a property. A pre-approval involves a lender reviewing your financial information, such as your income, credit score, and debt-to-income ratio, to determine how much money they are willing to lend you for a mortgage. Getting pre-approved for a mortgage before starting your Edmonton real estate search is a must. A pre-approval helps you move quickly in a hot market and clarifies what you can and cannot afford. Here are some reasons why having a mortgage pre-approval before you begin your home search is good practice!
What is mortgage pre-approval?
Mortgage pre-approval means that a lender evaluates your financial situation, determining whether or not you are eligible for a mortgage loan and, if so, how much you can borrow. During the pre-approval process, the lender reviews your credit history, income, and other financial information to evaluate your loan repayment capability. If you meet the requirements, you will be issued a pre-approval letter that indicates the highest amount you can borrow and the loan’s duration. Once pre-approved, you can begin your Edmonton real estate home search!
You will know how much you can afford.
Mortgage pre-approval will help you determine how much you can afford to spend on a home. This information can help you focus your Edmonton real estate search on properties within your budget. Without a pre-approval, you may find a home you fall in love with, only to find out afterwards that you can’t get the financing. These things happen, and when they do, they are very disheartening. Securing your financing will alleviate future disappointments and allow you to be realistic in your home search. Furthermore, by knowing what you can afford, you can plan for your future payments accordingly, helping you understand what your monthly expenses will look like with your new home.
You will have an advantage in a competitive market.
Having a pre-approval letter in hand when you start your home search can give you a competitive advantage over other buyers. Sellers are more likely to take your offer seriously if they know that you have been pre-approved for a mortgage, as it shows that you are a serious buyer capable of securing financing and that you’re ready to make an offer. In a hot market with more buyers than sellers, you need to stand out as a buyer. Having a letter of pre-approval will give you a leg-up in the competition, making a quicker offer.
You will save time and disappointment.
A mortgage pre-approval will allow you to focus your attention on homes within your budget, saving you time in the home search process. Looking at houses outside of your budget and getting excited about them just leads to disappointment and frustration. Buying a home is already an emotionally-taxing experience for most people, so minimizing your disappointments as much as possible is good practice. You can avoid these emotional obstacles by having your pre-approval letter that outlines what you can afford, giving you the peace of mind of knowing what houses and neighbourhoods are worth your time and energy to look at and get excited about.
Realty Unleashed would love to help you find your home!
Realty Unleashed is an independent real estate brokerage operating in both Edmonton and Calgary. Since we opened in 2018, we have made it our mission to change what you expect from your REALTOR®. We believe in earning your business every step of the way. The right time to buy is, first and foremost, when you are ready, and no one should rush you through the process. If you are looking for Edmonton real estate and need guidance through the home-buying process, our team would love to hear from you – you can fill out the form below, and we will get back to you right away!