Pre-approval of a mortgage is when your lender has reviewed all your financial information and has determined the maximum amount of money you can borrow. The advantages to pre-approval include:
- You know how much you can borrow, so you don't waste time looking at properties you can't afford.
- You don't have to worry about rising interest rates while shopping for a home, as usually the mortgage broker will guarantee the current interest rate for 60 - 90 days.
- You have an edge when you make an offer, because the seller knows you're more likely to get a loan.
- You save time when you apply for your loan because you've already assembled your paperwork.
Many banks and financial institutions are competing for your business so it makes sense to shop around for a mortgage. Most lenders will reduce their posted interest rate so don't be shy about bargaining. Your ability to bargain for a low rate and a flexible mortgage will often depend on how much business you have with the institution. You can contact banks and credit unions directly, or work with a mortgage broker. A broker will help you find a lender and the best mortgage package.
Once you have selected your lender, you will need to provide your financial information. Your lender will want the following:
- Personal information such as number of dependents and marital status;
- Details of employment, including a letter from your employer verifying your salary;
- Banking and investment information;
- Details of your assets (i.e.- a car, other property);
- Information on loans and other liabilities;
- Permission to do a credit check.
Once your application is complete, you will know how much you can borrow and you will be ready to start searching for a home.
(source - www.realtylink.org)