You're looking to get involved in the real estate market, but all you've heard is how quickly properties are being bought and how offers are being made subject-free (see my previous post on subject-free offers here). You might be wondering: "how do I buy real estate? What's the first step?" To me, getting pre-approved for a mortgage is the best place to start.
Step 1: Get pre-approveD - Do it now!
What else does a pre-approval help with?
Measures how much house you can afford, based on your current income, savings, and financial health
Determines how much your down payment (lump sum cost) and how much your monthly payments will be
They're completely free! A pre-approval is a zero obligation way to have a professional assess your personal financial circumstances and help to determine a budget for your living costs
Rate-hold! A pre-approval can hold a rate for up to 120 days to ensure you have something locked in while you search for a home. If the rate improves in this time, you get the better rate
Your REALTOR® will be able to accurately target properties that suit your lifestyle and price range, saving you time
From personal experience, I find that very few people have an accurate picture of how much they can truly afford to spend on a home, whether for personal use or an investment property. Many buyers start out with the notion that they are able to buy a much more expensive property than they are able to. When it comes time to purchase, a mortgage rejection can make a deal fall apart faster than it came together, leaving a buyer at square one. It is important to avoid this disappointment and not lose out on a property you have your heart on. Starting out with a foundational understanding of what works with your budget can also save you time and energy by avoiding viewing properties that are simply too far of a stretch. A pre-approval may also reveal a larger budget than expected.
So where do I get a pre-approval?
You have a few options here: banks, mobile mortgage specialists who are affiliated with banks, and independent mortgage brokers can all help you out. Ultimately, the choice is yours, and I am happy to provide information about each upon request. Choosing the right professional can go a long ways to guarantee a comfortable and smooth deal. As a professional REALTOR®, I have excellent contacts who can guide you in the pre-approval process.
Here are a few words from a two highly trusted mortgage professionals regarding pre-approvals:
Sohail Hussein, Manager, Residential Mortgages, TD Canada Trust
"One of the most over-looked pieces of the home financing puzzle is the pre-approval. Completing a pre-approval with TD Canada Trust allows you to not only be more time-efficient in searching for homes within a prescribed price range, but also provides you an opportunity to become familiar with the various mortgage products and services tailored to your needs. A pre-approval is also utilized to iron out the wrinkles that often arise during the home financing application. Resolving any potential issues early by working with TD Canada Trust will ensure an extremely positive experience once you make that offer!"
Sameer Padamsey, Mortgage Consultant, Invis - Lutz and Associates:
"Obtaining a pre-approval is imperative for a smooth home buying process. It allows a mortgage professional like myself to look at your financial profile through the eyes of a mortgage lender, and show you your various financing options. If there are any red flags, this gives us an opportunity to put a plan together to remedy them. With a pre-approval in hand, you can shop for your new home in confidence!"
If you're beginning the search for your first or next home, contact Adil to get you started. Any questions? E-mail me at adil@adilkhimani.com
All the best,
Adil