Why a pre-approval is more important now than ever.

As amazing as it feels at the closing, snapping up a house that ticks all—or at least most—of your boxes from one of Toronto’s prime real estate areas like South Etobicoke, can be a stressful journey. And much of the stress centers around home financing.  A mortgage pre-approval has been around for some time to lessen that stress, but today, given the current real estate market climate, this financing hack is more important than ever.

A mortgage pre-approval means that a mortgage lender has reviewed your finances to determine—and subsequently guarantee—the maximum amount they will lend you for your home purchase, and at what rate. Before all else, this step starts your house hunt on the right foot – you know what type of house you can afford and can zero-in on homes that are right for you.  And that’s not just a time-saver—it’s also a hedge against having your heart broken should you discover that the home you’ve fallen in love with is financially unattainable!

But more importantly, a mortgage pre-approval is an indispensable tool in the whole process of home buying today, especially in high demand real estate markets such as South Etobicoke.

With multiple offers and bidding wars on sought-after properties still abounding, a pre-approval gives you the advantage of acting quickly in placing an offer, and having the seller take your offer more seriously. Offers without mortgage pre-approvals are a risk to both the seller and the buyer. And more so today than before.  No doubt, you’ve heard of what’s known as the “stress test.” In 2016, the Canadian government implemented new mortgage rules, essentially requiring banks to conduct a test to see if homeowners can financially weather a hike in the interest rates.  And that means that banks have become stricter with mortgage lending, and applying for mortgage after your offer is accepted could turn out to be a heart-sinking experience.

A pre-approval is your proverbial leg-up in home buying, especially in the current time of stricter mortgage lending rules and the continuing competition for homes in Toronto’s prime locations such as South Etobicoke.  Along with the right agent, a mortgage pre-approval is your ace in the hole in the quest for that perfect home.