The most crucial part of the mortgage process is obtaining a Mortgage Pre-approval, this sets a guideline for the applicant’s qualifications and assists them in budgeting for their largest investment. Many underestimate and even avoid this part of the process entirely which can be detrimental.
A Mortgage Pre-approval should be a detailed review of the applicants qualifications based on income, down payment and credit report prior to investing in a property. The common error here is that most applicants are under the impression that a 15 minute calculation is sufficient, clearly it is NOT. There are many factors to consider and in the end the applicant can be held liable incurring legal implications of this over sight. Only a licensed mortgage professional can pre-qualify an applicant.
A Mortgage Pre-Approval is not a final approval, it is a draft indication of the client qualifications. The misconception is that their income, down payment documents and credit report are reviewed at this stage by the mortgage professional. Unfortunately this is a rare occasion. This is the stage whereby if there are any credit issues they can be discussed and remedied in advance. You should request that your mortgage professional review your credit report as a mortgage inquiry not a credit inquiry so you do not reduce your credit score.
A Mortgage Approval on the other hand is an agreement that both parties enter into, the applicants and the lender. This agreement indicates;
- acceptance of the property
- interest rate hold
- mortgage approval qualification confirmation
- down payment requirement
- appraisal to determine the property value, marketability and life span
- break down of mortgage required conditions to be met
- break down of lawyer conditions to be met
- terms and conditions of the mortgage term, amortization, product type, amortization and interest rate
However, this agreement is subject to many required conditions that can change “at any time at the lender’s discretion”. Although a Mortgage Approval can be agreed for 60-120 days the applicant is required to requalify every 60 days along with providing an updated credit report. Not all lenders allow you to take advantage of lower mortgage rates if the rates decrease prior to the closing date. On average lenders may only allow up to 2 interest rate decreases and some restrict adjusting the rate decrease to 1 week prior to the closing date.
You can understand how the process becomes quite complicated and timing of each stage is crucial to successfully manage the financing. The mortgage professional you choose must be qualified, capable and diligent in every stage of the transaction. They need to satisfy conditions required by your Realtor, Inspector, Appraiser and Lawyer.
Marisa Parise is a Mortgage Broker with over 30 years of experience in the financial industry. This Bolton based brokeris proud to use her established network of over 50 lenders to service her clients residential, industrial and commercial financing. This enables her to obtain customized products, competitive rates, flexible options, maximum pre-payment options and quick response times. Her extensive expertise can resolve any mortgage related inquiries and provide a clear understanding of best suited options. For your mortgage solutions Marisa Parise can be reached at [email protected] or 416-305-SAVE (7283) or learn more on her website MarisaMortgage.com
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