Planning on buying a home? Get a mortgage prequalification
Looking for your first home but don’t know where to start? Knowing your borrowing capacity is the first step toward making your dream of owning a home a reality.
Prequalification, sometimes called pre-approval, establishes the maximum amount you can borrow to buy a property. This amount is calculated by a financial or mortgage advisor using information like your salary, assets and debts.
Give yourself an edge with sellers
Once you know how much you can borrow, you can start looking for your dream home. It’s important to know that an owner may request a prequalification letter when you ask to visit the property. You can also submit one at the same time as an offer to purchase. This document will always show that you’re serious about buying.
With prequalification under your belt, some of the hard work is done! It’ll be particularly useful once the offer to purchase has been signed because you may have to provide proof of financing fairly quickly. This way, you’ll just have to get the final approval of your mortgage and you’ll be ready to go to the notary.
Secure your rate
When you meet your advisor, he or she will lock in the current mortgage rate with a financial institution. This will protect you against interest rate hikes and can help you plan the costs involved in buying a home.
To avoid unpleasant surprises, use this meeting to run a simulation of what your payments will be like once you’re a homeowner. Your borrowing capacity will tell you what your maximum mortgage can be, whereas this simulation will give you a better idea of what you can pay each month while maintaining a quality of life.