— There is a difference between pre-approval and being pre-qualified by a lender.
Pre-qualification, is the first step. It offers you basic comfort in knowing that in the lenders opinion you qualify for the mortgage. However, it is not verification. For that you need a pre-approval.
Pre-approval is a written confirmation that the lender has verified your credit, bank references and employment. It is not binding on the lender and remains conditional upon things such as the appraisal value of the property.
Advantage of a pre-approval –
A home’s first impression has been cited as the single most influential factor guiding many purchasers’ choice to buy. It is natural for us to lean toward the shine and glitter of a home that has been ‘tarted’ up with designer colors, proper staging and furniture the fits. However, you need to maintain your objectivity. A bucket of paint should not be the basis for your decision to spend many thousands of dollars. Check and re-check to ensure that the home actually suits your needs and is structurally and mechanically sound. It is important to know what is under the hood.
Retrospectively, you may be surprised at the minimal time you spend investigating your new home. A home inspection performed by a licensed and competent inspector is one of the best ways to give your home a good shakedown. Minimizing the surprises associated with potentially expensive underlying problems it a wise decision. An inspection will impart knowledge that will determine negotiation strategy and provide assurance that the choice made is a good one. Always insist that the appropriate inspection clause in included in any offer you put forward.
Make it a priority! Know your rights and obligations. Little understanding of either can lead to unnecessary friction between the parties to the agreement. Things to watch for are poorly written, incomprehensible agreements that are missing clauses – it is an open invitation to incorrect assumptions. Those often lead to increased costs or at worst an unenforceable agreement. Take your time. Read it carefully and ask your Realtor® to explain the implications. It is not unwise to seek a second legal opinion. Assure yourself that you thoroughly understand each component of the contract and its affect on your ability to fulfill them.
Sellers almost always receive a market evaluation from the listing Realtor® to establish value. As a buyer it is also a fundamental tool to help you determine what is a fair market price. An evaluation is full of information to help you determine the sold prices of similar homes, how long were they on the market and the difference between their asking and selling prices? You will need to know if the price being asked under, over, or at fair value?
Walk or drive around the neighbourhood. Do this at various times of the day in order to get a complete picture of neighourhood activities. Talk to the neighbours, they always have lots to say about why they live there. Check out the amenities the area has to offer? “Walkscore” is a quick and easy way to find this information on the web. Last and perhaps most important check with city hall to see what plans and zoning changes may be in the works.
Most lenders will insist that you have insured the building. Don’t wait. Talk to a number of general insurance brokers to determine which policy best suits your needs. If you buying a condo be sure to inquire about insurance that will insure against the cost of the deductible on the Strata Corporation’s policy. Some can be substantial.
Low ball offers may not be the best thing. In reality, this strategy often results in the seller becoming more inflexible. Employ the knowledge and skills of an experienced Realtor®. They know the strategies best suited for each situation.
Start by calling me. I know a lot of stuff that will make the process of buying a home less stressful. Place advantage on your side – have my experience work for you.