Are you thinking about buying a home? Part 2

First Time buyers, as well as repeat buyers, are often confused by two key terms- what it means to be pre-qualified or pre-approved for a mortgage.

These terms will almost always come up when you speak to a real estate agent be it at an open house or if you ask to see a property. This is a key question because it tells them how serious you are about buying. Getting pre-qualified is a very important initial step for a buyer to complete before you start looking seriously for a home. I would suggest that you do it even before you look online as you will know your price cap and you won’t be disappointed by looking at properties in a price range above what you can afford.

One mortgage lender I spoke to explained it this way. First get pre-qualified.  A pre-qualification is when you run the numbers on an unofficial basis. By numbers, I mean your monthly income vs your monthly debt repayment plus mortgage payment, plus heat, plus property taxes. In essence, a prequalification is to determine, how much you can afford. It does not take into consideration the whole financial picture or your credit history. It is a starting point only. It will give you an idea as to what you will need to save for a down payment. You will also find out what type of documentation you will need to gather together for when you go to the next step and seek a pre-approval. At this point there has been no credit check done etc. But, if you have a shaky credit history or if you are carrying a lot of debt, now is the time to discuss with the mortgage specialist how that might impact things when you seek a formal pre-approval from a lender.

Now, you know what it means when a real estate sales person asks you if you are pre-qualified and you will have a rough guideline as to what you can afford and what it will cost you.

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beardk

A real estate team that puts the clients interests first. They "Set the Gold Standard for Customer Service". Over 20 years of combined experience serving the greater Ottawa region including the many rural communities that surround the city. We love living in the country and from our residential real estate office in Metcalfe we can reach all parts of the city of Ottawa and the rural areas between Ottawa and the St Lawrence. Our main web site is www.BeardsleyTeam.ca and our Facebook page is Ottawa Country Homes and Lifestyle.