As a Toronto mortgage broker I hear a lot of myths and misleading facts when it comes to mortgages. This short article will help you identify some preapproval myths and preapproval facts when it comes to getting a mortgage preapproval.
Preapproval Myth – Mortgage Preapproval Means the Money is a Sure Thing:
A mortgage preapproval is usually full of conditions, and why not? When you submit an application, no information is confirmed yet. The lender does not even know the property you want to purchase. With so many unknown reasons in the equation, no wonder a preapproval for a house is not worth the paper it is written on.
In the case of a ‘high-ratio mortgage’ where the down payment is less than 20 %, the insurer (such as CMHC) provides final approval. It’s always a good idea to add a financing condition in your offer to purchase a property.
Preapproval Myth – All Preapprovals are the Same:
Not really. If you walk into a bank and get a preapproval, the bank does not even pull your credit history but when you see a mortgage agent they verify all your documents and get you a preapproval for a house.
Preapproval Fact – Mortgage Preapprovals are More Like a Rate Hold:
While shopping for your dream house, if you have a preapproval rate and the lender rates go up, you are still entitled to the preapproved rate.
These are just a few preapproval myths and preapproval facts about what you can expect if you wish to know how to get a preapproval. If you have wondered ‘is preapproval important’, I hope you found this article useful. For more information about mortgages and tips and tricks please visit my other blog posts.
