First Time Homebuyers
What is a mortgage pre-qualification?
Getting a mortgage pre-qualification is the first step in the home buying process. This comes before a mortgage pre-approval and is not to be confused with it. Mortgage pre-qualification is a relatively simple process where you supply your mortgage specialist with information about your financial situation including income, assets and debt. This is an easy and quick process that can be done over the phone or internet and at absolutely no cost to you. Pre-qualification does not take into account your credit card rating or give you an in-depth analysis of your affordability. However, pre-qualification does give you the opportunity to talk to your lender about any specific needs or goals that you may have. You can also get a better understanding of what mortgage rates and options might be suited to you. Pre-qualification can give you an estimate of the mortgage amount for which you can expect to get approved.
What is a mortgage pre-approval?
A mortgage pre-approval is a more thorough investigation of your financial situation. It will provide you, the homebuyer, with information regarding the value of the home that you can afford based on your income and savings, as well as the mortgage payments pertaining to a range of purchase prices. Specific documentation (including an official mortgage application) needs to be gathered and presented to the lender, who will then assess your situation (including current credit rating) and confirm that you meet all the requirements. It is important to note that if you pull your credit bureau more than three times within six months, this may actually lower your credit rating. Get in touch with a mortgage broker to start the pre-approval process. A mortgage pre-approval sometimes provides a mortgage rate guarantee for a specified length of time which protects you from possible rate increases (similar to a rate hold). There is typically not an application fee associated with this procedure, and you are not obligated to the bank or mortgage broker from whom you obtained your mortgage pre-approval. After this process, you will receive a conditional commitment in writing for a specified loan amount. This allows you to look for a home at or below that price level. This is an advantage when trying to purchase property as the person selling will know that you have been approved for an actual mortgage. This can be very helpful in a competitive market. For these reasons, it is to your benefit to receive a mortgage pre-approval.
First Time Home Buyers Tax Credit: http://www.cra-arc.gc.ca/gncy/bdgt/2009/fqhbtc-eng.html
Land Transfer tax credit: https://www.fin.gov.on.ca/en/bulletins/ltt/1_2008.html
CENTURY 21 B.J. Roth Realty Ltd., Brokerage*