In today’s fast moving market having a mortgage pre-approved will benefit you by providing you with the information required to move forward confidently with your home purchase. How can you shop for a property when you don’t know how much money you have to spend or more important the amount of the mortgage you will qualify for.
There have been many changes with regards to qualifying for a mortgage in recent months. If you currently own a home and have a mortgage you may take for granted that if you sold your home and were to purchase another that qualifying to do so will be a breeze. The new rules are making it much more challenging for qualification and the fact that you currently have a mortgage does not necessarily mean you will qualify for another today.
In addition to the new mortgage rules, rates have also increased in the past few weeks so you could be looking at qualifying at a higher rate than you currently have. The option to port a mortgage is an excellent opportunity to keep the rate you currently have if it is lower than existing rates and also alleviates paying a penalty on your existing mortgage—more savings for you to move forward. Keep in mind though you and the property you are purchasing must re-qualify to port the mortgage. Depending on the remaining term of your mortgage you may have to qualify at the higher benchmark rate of 4.64 per cent. That could be a deal breaker forcing you to pay the penalty and taking a new mortgage for a five-year term. Do your pre-approval before you list your home and be sure you are in a favorable position to move forward.
A pre-approval will provide you with a excellent understanding of the payments you can expect, including the amount of property taxes and strata fees (if applicable) and also provide you with information as to all the costs involved in purchasing a property. A good mortgage broker will advise you to make allowances for all expenses such as property transfer tax (if applicable), property tax adjustment and legal fees so you are well prepared for a smooth closing for all involved.
Keep in mind while a pre-approval is a very important key step it is just that—a pre-approval. Your offer to purchase will still be subject to the lender approving the property you are purchasing and confirm the value. Because you have already supplied your information the final approval will be a quick process.
Of Prime Interest is a collaboration of mortgage professionals: Trish Balaberde: 250-470-8324 trishb@creativemortgage.ca, Darwyn Sloat: 250-718-4117 dsloat@creativemortgage.ca and Christine Hawkins: 250-826-2001 christine@creativemortgage.ca.