Judy Lindsay Team News

Pre-Approvals - Do you have all the Facts?

January 11th, 2017

A mortgage pre-approval is the process of determining whether a borrower meets a particular lender’s guidelines for a home loan. A mortgage pre-approval gives you some confidence that you are a qualified borrower.  There are many facets to the pre-approval process:

  • Financial Picture
  • Debt/Loan Ratio
  • Assets
    • Investments and Interest
    • Other Properties
    • RRSP's
  • Liabilities
    • Car Loans
    • Credit Card Balances 
    • Student Loans
    • Line of Credit
    • Consignment or Guaranteed Loans
    • Liens
    • Child Support

 

The pre-approval only guarantees the interest rate for up to 120 days, which gives the buyer enough time to find a home and put in an offer to purchase. However, a pre-approval doesn’t necessarily mean anything if the house you just put in an offer on is being sold for way more than it is really and truly worth. Before your mortgage loan is approved, property details are taken into consideration to make sure that the house is worth what you are paying; this is not something to be frustrated with (although it can definitely chafe when you’ve been looking for months and finally found a home you can see yourself living in) as this is keeping you from spending money on something that really isn’t worth it. Your lender, whether it be a mortgage broker or mortgage specialist at a bank, will receive the details of the property through the offer to purchase and the MLS listing; if needed, they will arrange for an appraiser that they trust to head out to the property to take in the value.

 

When it comes to getting a mortgage loan, money always talks. If your cash flow has changed significantly since your pre-approval your chances of getting a similar mortgage loan may change. The lender will verify that nothing within the parameters of the initial pre-approval has changed such as a new car loan, losing your job or even changing employers. Your lender will update any of your financial information that has changed, add the specific property details to the equation, re-verify your credit score and include the particular mortgage product that you have chosen.

Another factor that has come to light when purchasing a home is the mortgage insurance. There is new legislation in Canada affecting the method adopted by CMHC, who is normally the insurer of the mortgage loans. Lenders require the mortgage insurance to be in place prior to finishing the details of the loan. This meansthat high risk borrowers (mortgages with down payments of less than 20%) must have the mortgage insurance in place to be able to borrow from lenders, including banks. Private insurance companies also offer this type of insurance. 

 

Talking to one of the knowledgeable agents at Judy Lindsay Team Realty is the best way to check into all the requirements for a pre-approval and to get all the facts concerning the new changes to the mortgage default insurance.  One of the Real Estate Specialists would be happy to answer any questions and help you in all aspects of the home buying process.

 

The more you research, the better your chances of acquiring the home of your dreams.

 

Call Judy Lindsay Team Realty today to talk to one of our knowledgeable Real Estate Agents: 204-925-2900.