Why You Should Get Pre-Approved for a Mortgage

Ryan Coffey
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Buyer: “Hi Ryan, I’m thinking of buying a home in Nanaimo…”

Me: “Are you pre-approved?”

I’m actually not quite that direct, but this is one of, if not the first question I ask every Buyer I work with. Being pre-approved at the beginning of your property search is a good thing for you, a good thing for me and a good thing for everyone else involved in the transaction. But it is especially good for you.

Here is why:

  • Being pre-approved for a mortgage is a form of knowing what you can afford before you go shopping. This sounds obvious, I know, but if you don’t know with relative accuracy what you will qualify for, then you don’t know with relative accuracy what you will be able to buy in the end. No need to waste time and effort looking at places that aren’t within reach. There’s a lot out there and this narrows things down considerably.
  • Something I hear fairly often is “I know what I can afford.” and maybe you do, but having that knowledge backed by a professional gives me confidence in that statement. More than that it  gives other parties we will be working with (such as other Realtors and Sellers) confidence in you, me and any offer we table. They simply will not take us seriously unless I can honestly say you are pre-approved.
    There is no benefit for them to essentially take their listing off the market for a few weeks only to have you find out that you can’t get the financing . In fact, having a deal fall apart on a property that can really hurt its eventual sale price down the road.  Having an offer that is backed with relative certainty about the financing, can translate into you being able to negotiate a better price. In cases of multiple offers on a really hot listing, this is one of the factors that will make the difference between your offer being accepted or becoming scrap paper.
  • Once you get the info back you may find that now is not the right time to buy. After some chatting with a Mortgage Broker, you might learn/decide that you should save more or wait until something with your tax returns or credit rating or what have you changes. That said, the opposite happens too, as you might find that it is better to buy now rather than wait. Everyone’s situation is different and continually evolving.
  • Paying for things like property inspections are unlikely to be in vain if your financing is already a solid bet.
  • You won’t have to put yourself through so much unnecessary stress.
  • Getting the mortgage organized is the most time consuming part of the subject removal stage. It will save you a lot of running around and stress having most of it done ahead of time.
  • It costs nothing but a little bit of time.
  • Even if you’re not currently able to afford a purchase, having this conversation with a Mortgage Broker will give you a solid plan to put yourself in the position you wish to be in.

It does bear mentioning that even pre-approved is not a 100% guarantee of approval, but it is a high probability of it. So now that I have explained “why”, I could ask you “Why not?”.

Ryan Coffey