Why Your Need a Mortgage Preapproval

Are you looking for a home? If so, it is crucial that you get pre-approved for a mortgage. If you think getting pre-approved is not that important, I hope that by the time you finish reading this article, your view on this is different.

As an aside, before I outline the 5 main reasons why a mortgage pre-approval is so important, you need to know that getting pre-approved is different from getting pre-qualified.

A Mortgage Pre-Approval Will Save You Time!

By getting pre-approved for a mortgage, you will know exactly how much of a loan you will be able to get.

Once you have this information, you should share it with your realtor. This will allow your realtor to only take you to check out homes that you can actually afford!

It may seem obvious, but there is absolutely no sense in spending your valuable time viewing homes that are not even within your price range.

By getting pre-approved - you won't be wasting your time!

Avoid Disappointment - Get a Mortgage Pre-Approval!

Getting pre-approved for a mortgage will also go a long way to help you avoid any disappointment and disillusionment.

Not only will you waste your time by checking out homes you cannot actually afford, but you may end up falling in love with one of them.

Can you imagine how disappointing it would be if you put an offer in on the home of your dreams, but then found out that your loan has been denied?

That's why you need to get pre-approved - so you are 100% sure of what you can afford - before you shop for a home!

A Mortgage Pre-Approval Increases Your Negotiating Power

A mortgage loan pre-approval will benefit you by bettering your bargaining position and possibly save you a bundle of money.

In the real estate market, many of the best properties often attract multiple offers. This is where you gain a competing advantage.

How? Well, if you approach a seller with a pre-approval, they are more likely to accept your offer - even if that offer is slightly less than the others.

Why? Because your offer will not be conditional on financing (you already are pre-approved), the seller can have peace of mind that their home is sold.

Unless any competing offers are backed up by pre-approvals as well, you will be in a better negotiating position, and could save a bundle of cash!

A Mortgage Pre-Approval Could Save You Money!

In addition to saving money on your home purchase, getting pre-approved for your mortgage could also save you money on the future loan. Pre-approval locks in the interest rate for a specific period of time (often for around 6 months).

This could save you money significant money. For example, if you purchased a home three months after getting pre-approved and, by this time, the mortgage rates have gone up - you would get your loan at the lower rate.

Why? Your pre-approval guarantees you that original, lower interest rate.

As well, if the interest rate goes down during that time, you will simply get that better interest rate on your loan.

If the mortgage rates go up, you will be kicking yourself for not getting a mortgage pre-approval!

Your Realtor Prefers You get a Mortgage Pre-Approval

Another great reason to get a mortgage loan pre-approval is that, otherwise, you may have difficulty finding a realtor who will work with you.

If you don't have a pre-approval for a mortgage loan, they may be wasting their time showing you or putting offers in on homes that you cannot even afford.

As well, since getting pre-approved has many significant benefits and no risks, your failure to secure a loan pre-approval may cause them to question how motivated you are as a homebuyer.

There are few things more frustrating for everyone involved - real estate agents, homebuyers, and home sellers than to get to near the end of this long process and your loan not being approved.

There is a simple way to avoid all this though - get a mortgage pre-approval!

Tim Feijer is the author of Canadian-Mortgage-Information.com.