In a very fast-paced market like we’re seeing here in London, Ontario, it’s critical to get a mortgage pre-approval not only so you know what how much you can afford, but also so that you can be fully prepared for a multiple offers situation.
Knowing the difference between getting pre-qualified and getting pre-approved can make the difference between winning the bid on a multiple offer situation and losing the house to another buyer.
You often will only get one chance to bid on the property, and it’s important that you’re ready with your best offer the first time around. Working with an experienced mortgage broker as soon as you start seriously thinking about purchasing a home is the best way to be well-equipped for finding (and buying) the home of your dreams in a seller’s market. It’s worth the time to go through the entire process to get a full pre-approval, and you'll also want to ensure that you have a rate hold in place before putting in an offer.
If you find yourself on the selling side of things, but plan on purchasing another property after you sell, make sure you know what your mortgage penalty is (if there is a penalty) as well as what your total real estate transaction costs are. These numbers will affect what you can afford for your next purchase and will be important to have on hand. Your mortgage broker will be able to help you calculate each of these costs and make sure that everything is ready for when the time comes to put in an offer.
Having a clean offer and being able to show the sellers that you are pre-approved for a mortgage will greatly help your chance at closing on a deal. That being said, it’s also important to be especially careful if you are bidding against other buyers who are waiving all conditions, (including financing) in order to make their offer more attractive. The thing to keep in mind, in this scenario, is that a pre-approval has qualified you as a buyer, based on your down payment, your income, and your credit score—but the lender will also need to approve the specific home that you purchase. This means that you could potentially run into problems when waiving all financial conditions, especially if the bidding war means that the property purchase price ends up being far beyond its currently assessed value.
The lender will want to make sure that the property is in good condition and that you aren’t overpaying for the property. Especially if you are purchasing a property that is a part of a condo association, the lender will also want to look into the history of the property to make sure that it has been properly managed.
Buying a home in a seller’s market means that it can sometimes take longer than expected to purchase a property that is right for you. If this is the case, and you think that you are going to need more time than the pre-approval time period or if rates start to go up, be sure to talk with your mortgage broker to reset the pre-approval so that you can lock in a great rate and make sure that it is still available when you finally close the deal.
Working with an experienced mortgage broker is more important than ever before, as your ability to secure financing quickly and reliably can make all the difference in a seller’s market. Here at Summerside Mortgages, your best interest is our top priority, and we work hard to help you get the right financing for the right property.
When you’re ready to start shopping for a property, give us a call or get started with our online mortgage pre-approval, and we can help you get ready for all the excitement and challenges of a seller’s market with ease and confidence!
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