Buyer Beware – The 60 second Pre-Approval

By Fred Knowles

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When thinking about buying a new house, it can be fun cruising around neighborhoods or prospecting through the MLS database. It’s exciting to look at your dream home and picture the better life that comes with it. Perhaps it’s equipped with a bigger property for the dog to run around, or within walking distance to your children’s school. It could take weeks, months, or even years to stumble upon that perfect place. When it finally happens, everything starts to move very quickly.

We’re bombarded with advertisements from banks claiming they have the easiest and fastest pre-approvals in the industry. Everywhere I look there are banks campaigning about their easy mortgage tools. But what do these really do? If you’re pre-approved in 60 seconds does that mean a professional took all your required documentation you’ll need at the time of an accepted offer and made sure you were fit to qualify? If that’s the case then I should start updating my resume immediately, because I can’t compete with that.

The reality is you punch in some basic details about your employment, debts, and some personal information….and boom, you’re “Pre-Approved”. Congratulations! What could go wrong?

Are you really Pre-Approved?

A lot can go wrong. It happens all the time. Every Mortgage Agent will tell you they are constantly working on “emergency” situations because a client has an accepted offer, and guess what, their financing fell through. But I was Pre-Approved! You work full time making a great wage, but did a professional explain to you that some banks won’t approve contract positions? Did they recommend you to a bank who would? None of this was explained in your 60 second pre-approval. This leaves you, your Realtor, and now Mortgage Agent scrambling at the most crucial point of your purchase.

The Value of Preparation

The term “Pre-Approval” is greatly misrepresented. Banks simply don’t have the resources or staff to fully underwrite files for people who don’t have an accepted offer on a house. Yet people are willing to go with the “easy” route after investing so much time finding that once in a lifetime home. When you talk to a Mortgage Agent, they’ll get you pre-approved, but also ensure you’re as close as possible to fully approved. A professional understands banks approval guidelines, and will ensure a smooth process from the minute you have that accepted offer. Taking an hour to talk to a Mortgage Agent has incredible value. Not only do you walk out knowing exactly where you stand financially, but a good Agent will go over all the important steps in the process so you’re always ahead of the game.

If your Realtor ever asks you if you’ve been Pre-Approved, the answer they should always get is “I’ve talked to my Mortgage Agent and know exactly where I stand.”

Fred Knowles

Dominion Lending Centres – The Mortgage Source


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