Short answer - YES. If you have just started your search for a home or thinking about it in the near future, then it is highly advised to get a mortgage pre-approval. If you're already working with a real estate broker to find a home, it's likely this would have been one of the first steps you were advised on taking.
Why is pre-approval advised as a first step and what are the advantages?
- It determines your exact buying capacity. There’s no worst feeling than finding your dream home, setting your heart on it, and then realizing you can’t afford it. Finding out exactly how much a bank would be willing to lend you prevents you from wasting your time looking at properties above your budget, and will steer you away from potential heart-ache down the line.
- It locks you in at the lowest interest rate. As interest rates go up and down, you want to be sure that you're happy with the rate at the time of your pre-approval. Having a pre-approval protects you from spikes in interest rates while you're still shopping for a property.
- It strengthens your offer. In a bidding war, sellers will always favor a pre-approved candidate, even if their bid is slightly lower. By having a pre-approval on hand when you put in an offer, you reassure the seller of your commitment by having already taken the first step
While pre-approval is an important first step, there are pitfalls which buyers should always be aware of if their loan application is later rejected.
Feel free to Contact Us if you have any questions about the pre-approval process.
If you're already Pre-approved and ready to start your property search, there's no better place than to get a Property Alert going!