With the spring real estate market underway you hear a lot about how simple getting a pre-qualification or a pre-approval can be. You’ll be told you can go online, fill in a few fields and are given a magic number. While getting a pre-qualification is a quick and simple process, it won’t leave you feeling as confident as a pre-approval with a licenced professional would.
Clients are often confused about the difference between a pre-qualification and a pre-approval so let’s talk about the differences and why getting a pre-approval is more worth your while.
During a regular pre-qualification a representative will ask you for details about your income, debts and give you a general idea of how much you could afford. It is a very basic analysis and it does not take into account your credit report which plays a large factor in whether you are approved or not later down the road when you find a property you want to put an offer on.
Getting a pre-approval done with a licenced mortgage agent involves a few more factors, however provides you the best results and allows you to go into a bid for a property with confidence. Your licenced mortgage agent will require your recent paystubs, a current employment letter and will pull your credit report to evaluate your credit history and beacon score. You’ll remember from a previous article 680 and above is where you would like to be. Other important factors such as property tax estimates and the cost of heating will also be taken into account. After looking at all this information they can give you a pre-approved amount and also provide you a letter if you wish. Often time Real Estate Buyer Agents will not work with you unless you can confirm you have been pre-approved for a mortgage. By knowing your pre-approved amount you won’t waste time looking at properties you can’t afford and can focus on finding your ideal home within budget.
If you have any questions about the pre-approval process or would like to get started on yours please reach out anytime.
Ericka Kodituwakku is your trusted Mortgage Agent in Ottawa specializing in first time home buyers. Contact her today for a FREE Homebuyers Guide and with any questions on the mortgage process.
Ericka Kodituwakku, Mortgage Agent
Mortgage Alliance Licence # 10530