Kingston Mortgage Solutions explains the pre-approval process

*Paid Business Feature*

It’s finally Spring — let’s talk about pre-approvals!

I actually don’t like this term at all, as it can often lead clients to believe they are actually approved for any house in their price range, which can result in them making offers with a false sense of security, no financing conditions, and can be disastrous if not ultimately approved.

We have had many clients of late say “I’ve been pre-approved at my bank”, but have not even had a credit bureau report pulled, or been given any confirmation! A discussion is not a pre-approval.

In fact, pre-approval standards are all over the place, with varying degrees of scrutiny involved by various lenders and mortgage brokers/agents.

For example, some lenders do not look at any documents, but rather issue a rate hold for a certain number of days, based on basic input criteria. Others do review documents and then issue a pre-approval letter, which is better, assuming accurate, up-to-date information is provided at the time of application.

Pre-approval files also do not take into account the specific property you are considering. And if it is an insured purchase (i.e. CMHC insured) the file is not submitted to the Insurer until it is a real deal. If clients have 20% down, no CMHC is required BUT the lender may require an appraisal to confirm the market value. With prices dropping in our market, this may be a requirement in some situations.

In terms of pricing, it is a fact that many pre-approvals never proceed as real deals, so many lenders hedge their pricing with a 0.10% or 0.20% bonus on the rate, and only accord their very best rates once it is a real deal.

So what should you do? Is there any value in being pre-approved?

At our brokerage, we think there definitely is, though some work is required upfront to collect all documents relating to income/employment, credit, down payment, assets/liabilities, etc. Then, a thorough review is done to determine how much house clients potentially could afford, and a rate hold is then obtained for up to 120 days.

We like to think of this as being “pre-qualified” and work closely with you and your Realtor to ensure your buying experience is smoother, and move quickly to obtain the actual approval once you have an accepted offer.

So, why not get “pre-qualified” today? There’s no cost or obligation, and, at Kingston Mortgage Solutions, we’ll give you the confidence you need to buy smarter and help eliminate any surprises once you sign that offer.

David Sutherland is the Principal Broker at Kingston Mortgage Solutions.

This article is sponsored by Kingston Mortgage Solutions, who also submitted the content. If you are interested in a Business Feature on Kingstonist, contact [email protected]