Obtain A Pre-Approved Mortgage
Jarmo can put you in touch with a lender or mortgage consultant who can provide you with a pre-approved mortgage and interest rate guarantee for up to 120 days! Please feel free to contact Jarmo to discuss your pre-approved mortgage.
How Pre-Approved Mortgages Can Make House-Hunting Simpler
by Jarmo Stromberg
You sat down and worked out a budget to determine if you could afford to purchase a home. You checked it and re-checked it until you were very sure that the numbers you crunched say, "Yes, I can afford to be a home owner!" But do you know how much of a home you can purchase?
Getting a pre-approved mortgage allows you to find out how much you can borrow before you start house-hunting. A pre-approval can offer you several advantages as a potential home buyer, the most obvious of which is to identify the price range that suits your budget and lifestyle. Once you clarify the amount of mortgage you can afford, you will be able to narrow your house selection process to homes on the market in that price range.
In today's fast-paced residential real estate market, any advantage you can gain over other bidders should be used! In some cases, vendors won't even consider conditional offers. A pre-approval allows you to put forth a firm offer, which increases your chances of success in the bidding process.
Knowing what you can afford prevents you from buying a home that down the line you may be unable to carry. In the worst case scenario, this situation may cause you to lose your home or suffer through expensive legal wrangling. At best, it may leave you house-bound, unable to afford to do anything else but pay the mortgage and maintenance of your too costly home.
Pre-approvals give you peace of mind in other areas as well. For instance, it guarantees the mortgage rate you negotiated with your financial institution for up to 90 days, even if rates increase during this period. It is important to note that the pre-approval does not obligate you to retain the relationship with the lender that has pre-approved you, if you get a better deal from another financial institution.
When you sit down with a lender to apply for a pre-approval, the mortgage officer will first look at the down payment you have available To qualify for a conventional mortgage, your down payment must be at least 25 per cent of the property's purchase price. If you do not qualify for a conventional mortgage, you must get mortgage insurance that guarantees the lender will be repaid. Depending on the size of your down payment, premiums will vary. Traditional lenders will also consider gross income, housing costs (i.e., mortgage, property taxes, utilities, etc.) and total expenses (i.e., other loans, credit cards, etc.). If your housing costs exceed 32 per cent of your gross income, or your total expenses take up more than 40 per cent of your gross income, most lenders will inform you that the mortgage is too large.
Prepare yourself for your pre-approval. Review newspaper listings for mortgage rates offered by different vendors. Surf the Internet -many sites offer complete mortgage shopping services, including pre-approval spreadsheets you can complete on-line. And above all, shop around. Speak to loan officers at local branches of a variety of financial institutions including banks, trust companies and credit unions.
