What is Does it Mean to Prequalify for a Mortgage?
The borrower has provided a mortgage broker or bank with documentation of income, assets, and debts. Additionally, the broker or lending institution has checked the borrower’s credit score with the credit bureaus. With this information, the lender can provide the borrower with the amount of any potential mortgages, based on the monthly payment and length of amortization.
What are the Benefits of Pre-Qualifying for a Mortgage?
To begin with, most realtors will not work with a client who is not pre-qualified. More importantly, this free service ensures that the purchaser has a realistic idea just how much real estate he or she can afford. It can also be a negotiation tool with the property’s seller, as it shows that the client is serious about purchasing and is in a strong position to do so quickly (and it will lessen the seller’s paperwork).
Prequalification is NOT Guaranteed Mortgage Approval
There are two common scenarios in which a pre-approved mortgage may fall through. If, for example, an Ottawa mortgage seeker has been pre-approved, but the property being purchased is valued by the lender’s Ottawa mortgages inspector as being lower than the price it is being sold for (it needs structural repairs, there are environmental issues, it is discovered to have housed a marijuana grow-op, etc.), the mortgage may not be granted. The second reason is when the lending agency discovers that the borrower has provided false information about revenue or debts on the pre-approval application.
If you have additional questions or would like to see if you can prequalify for a mortgage in Ottawa you can use our Ottawa Mortgages Directory to find a mortgage broker or mortgage bank specialist to help you.