What is its purpose?
In the previous article, we discussed the value of a budget and the importance of putting money aside to raise a down payment and to demonstrate to lenders your ability to meet the financial demands of an owner. But how much money do you need? What is your borrowing capacity?
These are two questions that your mortgage broker can help you answer in pre-approving you for a mortgage. Indeed, the mortgage pre-approval is an indispensable tool for anyone shopping to buy a property. It can target the market that will best suit your financial situation.
But what is a mortgage pre-approval?
This is simply the result of an analysis of your ability to become owner. Your mortgage broker will consider your income and current expenses, to which he will add the costs related to the management of a property. The results of this analysis will tell you how much your budget allows you to pay for a house. That is why it is important to get pre-approved before you start shopping: then you will clearly know the limits to be imposed and you're less likely to choose a property that exceeds your ability to pay.