Are you looking to buy a new home? It’s a good idea to get pre-approved for your mortgage before you start looking for your dream home. Getting pre-approved comes with many benefits and can help you keep your hopes and expectations realistic as you speak with builders and tour homes. Read our blog to learn more about what mortgage pre-approval means, what the benefits are, and how TroiWest can help you find your dream home!
What is Mortgage Pre-Approval?
A mortgage pre-approval is an agreement between a mortgage lender and a prospective home buyer that shows a limit to what you can borrow for your mortgage. How long a mortgage pre-approval lasts depends on the mortgage lender, but typically this pre-approval will only be locked in for 60 to 130 days. Prospective home buyers should wait until they are ready to purchase a home before getting pre-approved as this rate locks in your spending limit and interest rates. Pre-approvals are achieved by showing a lender bank statements, proof of income, and a credit score check. Pre-approval isn’t a guarantee that you’ll get a mortgage, but it is a great guide for what homes to tour and look at, and a pre-approval ensures you’re that much closer to getting a mortgage loan.
Mortgage Pre-Approval versus Pre-Qualification
Contrary to popular belief, pre-approval and pre-qualification for a mortgage are not the same thing. Pre-qualifications can be done online quickly, and they don’t involve any promise or contract from a mortgage lender. Pre-qualifications require only a few details and the results are almost instant. Looking at your pre-qualification is a great start before you’re actually ready to start looking at a home as it can act as a guide to your browsing.
Once you’re serious about purchasing a new home, that’s when it’s a good time to visit a mortgage lender and get an official contract with your pre-approval rate.
Benefits of Mortgage Pre-Approval
1. No Surprises When House Hunting
It happens all the time when families find their dream home before being pre-approved, and when they head to the mortgage broker they aren’t actually approved for the mortgage they need for the home they want. Getting pre-approved saves you the heartache and time wasted on houses you can’t afford, allowing you to only look at and fall in love with homes that are within your budget.
2. Pre-approval Shows You’re Motivated
Having a pre-approval rate shows the sellers that you’re serious about buying a home. Whether you’re looking to stand out in a competitive market or you simply want the seller to take your offer more seriously, pre-approval indicates you’re ready to buy a home.
3. Pre-Approval Helps You Financially Plan
Getting pre-approved for a mortgage allows you to see what the next five years (if you sign on for a fixed rate mortgage) of mortgage payments would look like. Make sure that this is something you can feasibly afford and won’t leave you mortgage poor. Remember, just because you are pre-approved for a certain mortgage, doesn’t mean you need to spend the entire amount. Speak to a financial advisor before signing on to a mortgage to ensure that the mortgage payments won’t become taxing on your family.
4. Narrow Down Your Search
Looking for houses is time consuming and taxing. There are so many communities, homes, and builders to consider. So, by getting yourself pre-approved for a mortgage you’re setting yourself up for a much less exhausting process. Pre-approval will help you narrow down the builders, communities, and homes you will even consider, never mind tour.
5. Speed Up the Closing Time
By getting pre-approved you will speed up the closing process once you find your dream home. The majority of closing time on a house comes down to getting approvals, if you already have your mortgage rate pre-approved, you can save yourself a lot of administrative time!
How Does Mortgage Pre-Approval Differ for Pre-Construction?
There isn’t a huge difference between getting pre-approved for a mortgage for a resale property versus a new or pre-construction home. However, if you are getting a mortgage for a pre-construction home rather than a quick possession, your mortgage lender may provide the money in increments based on completion points of the home, rather than a full sum amount.
Should I Get Pre-Approved for a Pre-Construction Home?
Yes! Getting pre-approved is a great idea no matter what kind of home you choose to purchase! TroiWest works with several fantastic mortgage brokers who can help you get a pre-approval for a new or pre-construction home of your dreams!
In order to get pre-approved for a mortgage, the first step is contacting a mortgage broker. They will work with you to gather all the necessary documents including bank statements, proof of income, credit scores, current debt rations and assets, and more. Once you have all the necessary information, your mortgage broker will provide you with the maximum mortgage you would be permitted to borrow as well as an interest rate! This agreement would also have a limit on how long it is valid. Stacey Petruch is the primary mortgage broker our team at TroiWest works with. She understands the ins and outs of getting a mortgage and pre-approval for homes in the new construction industry, and she will help you as you journey through the process of finding your perfect home!
Find Your Dream Home with TroiWest
TroiWest builds a variety of gorgeous homes throughout Edmonton! We have quick possession homes available from affordable duplexes to luxury attached garage, single family homes! Getting pre-approved is a fantastic way to start working with TroiWest, as we’ll show you homes within your budget to ensure you find the perfect home for your perfect price!