In keeping with “Keeping Real Estate Real”… here I am sitting at my office desk preparing an offer. Potential Buyers, whom I don’t know, attend my office and would like to see a specific property listed at $350 000 and are looking for a 4-bedroom home, 3-bath, open concept kitchen with a dining room with patio door leading to large fenced yard with a pool.
I say, “it would be my pleasure to be of service and help you find that perfect home and ask for their mortgage pre-approval letter.”
They say something along the lines, “We don’t have one. No need to get pre-approved. We always paid our bills and our monthly rent. If we pay rent we can surely afford a mortgage; it’s the same thing. We both are employed, have two vehicles and a motorcycle, and take yearly trips and have a summer travel trailer. We probably qualify for around $400 000.”
Perhaps I could have said, “let me help you pre-qualify yourself right now.
Take your annual income, multiply by two and a half and voilà that’s what you could maybe possibly qualify for if you and all the stars line up perfectly. There you have it…you’ve been pre-qualified. “
If you’re serious about buying a home, you’re going to want to get a pre-approved mortgage to confirm with the bank that the stars do, in fact, line up in your favour. Instead, I give the prospective clients the benefit of the doubt, say “Great!” and provide them with a list of lenders or strongly encourage them to set up an appointment with their preferred mortgage lender or bank and to let me know when their pre-approval letter comes so we can begin visiting homes.
One week or so later, they called me and are upset that all the stars do not line up perfectly and they don’t qualify for a mortgage.
I don’t mean to sound jaded, but Buyers need to be both prepared and be realistic about what they can afford. The experience of buying a home can and should be a joyous and an exciting journey. Gathering all the required documents can be a discouraging and daunting task, particularly for first time home buyers. But it needs to get done! DO IT BEFORE VISITING HOMES.
A common myth that exists regarding home-buying is a buyer should find a
home before getting pre-approved. The truth is, all buyers should get their financial ducks in a row before looking at homes, and that includes securing a pre-approval letter from their lender.
Having a pre-approval letter is the first important step to a good house shopping experience. The buyer will have evidence of their ability to pay and shows how serious the buyer is in purchasing a home. Real estate representatives and sellers will appreciate this and will be eager to work with buyers.
Before you even start looking at houses online or dropping by that open house or visiting homes with a broker or sales representative, take the first important step forward and get your pre-approval letter.
WHAT IS A MORTGAGE PRE-QUALIFICATION OR PRE-APPROVAL LETTER?
Mr. Jeremy Ridley, one of the top Mortgage Specialist Nationally with RBC, “In the mortgage industry, there are ‘pre-qualifications’ and ‘pre-approvals.’ A pre-qualification is a verbal discussion of what you may qualify for. A pre-approval, to which we do in our office, is what client should strive towards, as this is a fully verified client, meaning all credit, assets, liabilities, etc., are reviewed carefully and structured to ensure the affordability of the new home. 100% of the time, our office provides only full pre-approvals, ensuring clients can confidently shop for their home.”
At first, the pre-approval letter may not seem to be a vital document for a
Buyer, but trust me, it is one of the most potent documents in the home buying process. It is crucial to real estate representatives and home sellers. For a serious buyer, the pre-approval letter carries a tremendous amount of weight. It is evidence and clarifies how much you can afford to borrow. This will provide the necessary confidence for you to search for your next home and can save you the pitfall and heartbreak of falling in love with a home that you can’t afford.
It may not be a 100% guarantee of a mortgage, but it surely adds proofs of your capability of buying. It stacks the odds of a tough negotiation in your favour, assures savvy sellers proof of financing, negotiates better price and conditions, reduces financial condition time, helps you stand out from the sea of other home buyers, and honestly, an excellent real estate representative will not work with un-approved buyers. Stack everything on your side!
So if your future real estate representative asks the dreadful question “do you have a pre-approval letter,” please don’t be offended. They are not trying to be pushy and forward or attempting to size up how much you can spend. At least not most registrant… Expect the question, be prepared to answer, and you should want the registrant to ask the question. The question is being asked because it is entirely relevant for them to know as it is entirely essential for you to be pre-approved. Get pre-approved before you even start looking. Let the real estate representative know you’re pre-approved, the amount and financial institution before they even ask. You’ll set yourself apart from many other buyers the real estate representative has ever met.
Buying a home is a bid deal!
There are many factors and processes of buying a home and being well prepared in advance is going to serve you very well along your journey. By now, I trust that you can appreciate and see the foremost value of a pre-approval letter in a successful home buying experience. Don’t hesitate to ask your real estate representative for recommendations of banks and mortgage brokers that their clients had significant experience working in the past. Don’t hesitate to ask your representative if she or he will receive any finder fees for referring you to them. If they are, it raises a red flag, and you will have to consent for them to receive a finder fee. I don’t accept any fees or gifts. If I refer my clients to a service provider, it is because I trust that they will provide exceptional service above and beyond the real estate transaction as I do.
Looking for a home without a pre-approval letter is simply silly! Review and follow the Pre-Approval Mortgage Checklist here, and get started on a happy home buying journey.
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SOURCES
Interviewed: Jeremy Ridley | Mortgage Specialist l RBC Royal Bank | Royal Bank of Canada | 5 Armstrong St, New Liskeard, Ontario, P0J 1P0 | T. 705-739-4684 or 705-726-2626 | F. 705-726-5501 | Email jeremy.ridley@rbc.com | Web www.jeremyridley.com
2009-2018
Pre-Approval Mortgage Checklist compiled by Marc Martin Your Real Estate Guru! (705) 676-7799. Click here!
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ABOUT THE AUTHOR
The above Real Estate information topic of discussion was provided by Marc Martin, Your Real Estate Guru! Marc created marcrealestateguru.blog site because of a need to provide a trustworthy, authoritative and a leading blogging home to “Keeping Real Estate…Real.” Its various insightful blogs will benefit Sellers, Buyers, Realtors and anyone interested in Real Estate. Genuineness, truthfulness and straightforwardness are the building footings for every article. Marc can be reached by email at marctherealestateguru@gmail.com or by phone/text at (705) 676-7799.
Marc has helped people move in and out of many homes in the Temiskaming Shores area and strives for perfection in every transaction. “I do more because you are worth more, and being a protector of my client’s interest is the single most crucial factor in my business!”
Copyright © 2018 Marc Martin
Marcrealestateguru.blog exposure is a site designed to give Ontario’s home Seller’s, Buyer’s and Realtors a dominant online presence. Marcrealestateguru.blog is owned and operated by Marc Martin Real Estate Broker at Royal LePage Best Choice Realty Ltd. Brokerage, who covers Temiskaming Shores area and beyond including, Cobalt, Latchford, Temagami, Elk Lake, Matachewan, Earlton, Thorloe, Englehart, Larder Lake, Belle Vallée.
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