6 Reasons to Get a Pre-Approval

There are a few good reasons why a pre-approval is an excellent first step when looking for a home.

1.  Know your financial limits.  Buying a home requires both your head and your heart.  You might qualify for  more money than you should be spending.  For example, if you have high daycare costs, then it is prudent not to buy the maximum loan amount that you qualify for.  By getting your per-approval done BEFORE falling in love with a  home, you will more likely stay within your budget. 

2.  Going through the process of a pre-approval begins your education process.  You don't want to be overwhelmed by buying a home.  If you approach the financial side of things first, you are breaking the process into manageable pieces.  Mortgage options can be complex and you want to consider your options without the emotions that happen after looking at homes.

3.  A pre-approval might help you get your financial house in order.  For example, the process might reveal a mistake on your credit report.  You are better off dealing with that upfront.  You might also be trying to decide between paying off a car loan versus putting the money towards the down payment.  By going through the pre-approval process the better choice will become clear.

4.  Nobody likes paper work - well except Revenue Canada!  In the pre-approval process you will be required to get your papers in order.  Often the most onerous set of papers includes proof of the source of down payment.  It is best to get this sorted beforehand and avoid stress later on.

5.  The pre-approval sets up the relationship with the mortgage broker, realtor and possibly the lawyer/notary.  To ensure a smooth home buying process you want to have your team assembled and working together on your behalf.  The truth is that most realtors won't go to the next step until you have a pre-approval anyway.

6.  A pre-approval holds an interest rate for you.  If rates go up, you are still safe with the lower rate.  If rates go down, then you can get the lower rate.  You can only win with a pre-approval.