Do You Need a Pre-Approval Letter to Put in an Offer on a Home
While getting a pre-approval letter isn’t a mandatory requirement when putting in an offer on a home, having one will improve your chances of a seller looking upon you favourably. As your local Hamilton mortgage broker, we know that having your finances and paperwork in order before looking at homes is a necessity in the home buying process. The more organized your financials are, the better.
What is a Pre-Approval Letter?
A mortgage pre-approval is an assurance from a lender that they will give you the financing needed to buy a home for up to a certain amount. Your local Hamilton mortgage broker will be able to find you competitive mortgage rates that will assist you with your pre-approval.
The Pre-approval Process
We will first need a lot of paperwork from you, such as pay stubs, tax returns, residential and job history, and any investment accounts. This is how they create your financial portfolio that lenders will use to determine if they will give you a pre-approval or not. Your Hamilton mortgage broker will then look for a few deals that suit your needs and put you in contact with the lenders.
From there, you will fill out an application, which can usually be done online, in person, or over the phone. The lender will run a credit check to see what your credit score and history looks like. They will also look at your financial portfolio to determine your income and expenses. The lender will then decide if you qualify for a loan and how much you can be approved for. Once this is done, the lender will put all of this in writing as your pre-approval letter.
Benefits of a Pre-approval Letter
Not having a pre-approval letter not only wastes the time of a real estate agent, but yours as well. Looking at homes without knowing what amount you are pre-approved for, or not having the pre-approval already means you can’t act on getting the process started should you find a home you really like. Having a pre-approval gives a buyer an edge over those who haven’t gotten certification from a mortgage lender. Many real estate agents will give buyers with a pre-approval letter priority when it comes to viewing homes and making offers.
While you don’t need to have a pre-approval letter when looking at a home, real estate agencies prefer home-buyers who have one because it shows them that you are capable financially of making the purchase, and that there will be no issues, complications, or hold-ups with the mortgage process. Sellers often prefer this as well because it means they can get their home sold quicker.
Before putting an offer in on a home, visit your Hamilton mortgage broker. We can help you create the most attractive financial portfolio that shows you have everything in order. It can really give you an advantage as a buyer and you will know beforehand what your mortgage amount cap is. This helps real estate agents find the best homes in your price range, meaning you won’t be wasting time looking at home that you know you just can’t afford, or putting in an offer without knowing whether you will be approved for the mortgage amount you want.