Benefits of a Mortgage Pre-Approval
You may have heard some recent buzz in regards to potential mortgage rate increases coming soon. As a matter of fact, we have actually seen some lenders increase rates for fixed mortgages being offered in market recently. In some cases, a sub 2% fixed mortgage rate is now being offered around 2.7% for example. Could other lenders follow in these foot steps soon? With 2022 upon us and the potential for rates to increase, locking in a pre-approval for a mortgage could be a very smart strategy.
What are the Benefits of a Mortgage Pre-Approval?
Gain peace-of-mind by having a protected rate for up to 120 days:
There are several lenders that will work with us to offer a rate that can be locked in for 60 to 120 days
The keywords here are “locked in” which means if there is a rate increase in early 2022, you have the security of to plan ahead and shop for your next home with this secured rate in your back pocket.
Know your buying power:
a pre-approval for a mortgage rate will clearly define how much you can borrow to purchase your next home
It’s best to do this in advance rather than having a deal fall through on a home that you and the family have fallen in love with. Otherwise, a buyer could be scrambling to find new sources to obtain funds to level up
Additional fund sources could include family, friend loans or finding a co-signer. The process to ask for money could become uncomfortable and stressful when trying to generate funds within a limited timeframe for some buyers.
Estimate your monthly mortgage payment and home budget:
we all have family budgets and it seems like items such as food, utilities, gas and other necessities have all seen price hikes this year
by using a pre-approved mortgage rate to determine the monthly payment for a new home, will allow the buyer to better budget for all other items or services required for daily needs.
Extra negotiation power:
the seller or the Realtor on the other side could take you and your offer much more seriously compared to another potential buyer that still needs to go through the steps of getting approved for a mortgage and sorting out their financing
having a pre-approved mortgage rate or solution in place will surely provide extra power by giving your offer a chance to standout
For the buyer, the above benefits are most definitely positives. However, some lenders or institutions may not be so eager to offer mortgage pre-approvals as they are looking for a “sure bet” as they want to ensure the buyer signs the final approval through them as well. When it comes to working with a Certified Mortgage Broker such as myself, it is my duty to do the legwork and to support my buyer by the way of bringing forth lenders who are willing to do the pre-work in advance.
I invite you to connect with me at anytime to learn more or to pre-plan your next home buying steps.
All the best,
Sukh Sangha