Financing Your Purchase

Buying a home is an exciting milestone, but navigating the world of mortgages can feel overwhelming. We're here to simplify the process and provide you with the essential information you need to make informed decisions

Before you start talking to lenders, it's helpful to get familiar with some key mortgage terms. Knowing the basics will make conversations with financial professionals smoother and help you feel more confident.

•            Amortization Period: The total length of time you'll take to pay off your mortgage.

•            Fixed Interest Rate: An interest rate that stays the same for a set period, giving you predictable payments.

•            Variable Interest Rate: An interest rate that can change based on market conditions, which can affect your payment amounts.

•            Prepayment Penalty: A fee some lenders charge if you pay off your mortgage early or make extra payments beyond what's agreed upon.

What Is Mortgage Pre-Approval?

Mortgage pre-approval is when a lender reviews your financial situation—including your income, debts, and credit history—to determine how much they're willing to lend you. While it's not a final commitment, it provides a clear picture of your borrowing capacity.

Why Get Pre-Approved?

1. Know Your Budget
Understanding how much you can borrow helps you focus your home search on properties within your price range, saving you time and potential disappointment.
Example: If you're pre-approved for $500,000, you can confidently look at homes in that range.
2. Secure an Interest Rate
Many lenders will lock in an interest rate for up to 120 days during the pre-approval process. This means you're protected if rates rise while you're house hunting.
Example: If interest rates increase from 5% to 5.5%, your rate remains at the lower 5% you secured during pre-approval.
3. Strengthen Your Offer
Sellers are more likely to take your offer seriously if you're pre-approved, as it shows you're a committed and qualified buyer.
Example: In a competitive market, pre-approval can give you an edge over other buyers who haven't secured financing yet.
4. Streamline the Closing Process
With much of the paperwork already completed, finalizing your mortgage can be quicker and less stressful.

You have several options when seeking pre-approval:

Financial Institutions

Banks and credit unions offer mortgage services and may provide benefits if you're an existing customer. Don't hesitate to ask for better rates or terms, especially if you have a strong relationship with your bank.

Mortgage Brokers

Mortgage brokers can shop around on your behalf to find the best rates and terms from various lenders. They can be especially helpful if you're looking for options beyond the traditional banks.

What You'll Need for Pre-Approval

•            Personal Information: Identification, marital status, number of dependents.

•            Employment Details: Proof of employment and income, such as pay stubs or a letter from your employer.

•            Financial Assets: Bank statements, investment accounts, details of any other properties or assets.

•            Liabilities: Information on existing debts like loans and credit card balances.

•            Consent for Credit Check: Lenders will need to assess your credit history.

Having these documents ready will make the pre-approval process smoother and faster.

Mortgage Calculator Example