There are a lot of steps in the homebuying process, so it’s perfectly natural to feel tempted to cut some corners. As professionals who have been in the mortgage industry for a long time, we know that even steps that seem redundant can be imperative to the success and ease of your mortgage application. We are often asked whether getting pre-approved is helpful at all. Not only is it helpful, but it should be one of the first steps you take when you decide to start looking for a home.
Set Your Budget
Shopping around can be challenging when you don’t know what your budget is. Getting pre-approved gives you a viable limit. That way you don’t get overwhelmed looking at every single home on the market or falling in love with a place you can’t afford.
- But don’t forget to… assess your own finances after the fact. Calculate your monthly expenses and determine what you can realistically afford. Just because your lender approves you for a $300,000 mortgage doesn’t mean you will be able to comfortably make payments on that large of a loan. Use the pre-approval to inform your budget and find a price that works for you and the lender.
Speeds Up the Process
Nowadays, pre-approval is a common practice. In fact, most sellers expect buyers to be pre-approved. Not having that letter means you need to start the process of seeking out a lender and applying, eating up valuable time.
Commonly Asked Questions
- Does getting pre-approved affect your credit score? No, getting pre-approved will not affect your credit score. Only applying for an actual loan will do that.
- When should you get pre-approved? As soon as you want to start looking at houses, you should get pre-approved.
- How long does pre-approval last? In most cases, pre-approvals are valid for three months. Any longer than that and you will need to reapply.
- Can your loan be rejected if you were pre-approved? A pre-approval is not a guaranteed loan, so if your financial situation changes between the time you are pre-approved and apply for the mortgage, you could be rejected.
Getting pre-approved is a key step to narrowing down your housing options and streamlining the homebuying process. A mortgage broker can help you shop around for a great pre-approval rate and mortgage terms. If you’re ready to buy a new home, it’s never too early to get started. Give our South and Central Alberta team a call today!