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What is a mortgage pre-approval letter and what's it used for? - YouTube
Channel: Homebuyer's School
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Welcome to Homebuyer's School,
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brought to you by Brookfield Residential.
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So hi everyone and welcome to another
edition of Homebuyer's School.
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Today I'm joined by Mujtaba Syed,
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a mobile mortgage specialist with
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TD Canada Trust, and today the
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question we're gonna answer is, "What
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does a pre-approval letter mean and what
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actually determines that letter?"
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So Mo, what is a pre-approval letter?
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So a pre-approval letter is technically your
approval letter is once you've gone
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through the pre-approval process you've
gone through the application process and
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you have been pre-approved now, it's
technically a letter kind of stating that,
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kind of summarizing the whole
conversation you might have had with
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that lender, will break down your amounts
that you're pre-approved for. It might
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even have some of that CMHC or the
insurance portion of it and I kind of
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told you a little bit about the
insurance part. So in Canada, if you're
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putting less than 20% down, it is
absolutely mandatory that we go with
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something called default insurance which
is something that banks kinda require
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and it's something that kind of
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safeguards them and safeguards kind of
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like the real estate industry if there
is a default that it is taken care of.
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So your mortgage letter and your
mortgage specialist should be able to
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discuss that with you during the whole
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process. We'll actually have that
breakdown. Our pre-approval letter will
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also have the interest rate breakdown,
the one that you've discussed so there's
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no confusion, there is no mistakes and
we'll have that and it will actually be
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signed by the lender. And there might be
some conditions on there that you might
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need to fulfill after the pre-approval.
There might be conditions regarding the
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application, the process that you had
discussed, some things you might need
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to work on. Those could also be on that
letter.
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How long does the letter last for?
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Yeah the letter will have an
expiry date on it, which is technically
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the same amount as a pre-approval so
which should last about 90 days.
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Who would need that pre-approval letter?
Yeah so nowadays a lot of real estate
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agents - agents, brokers, builders who are
working for you to help you find that
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perfect home might require that letter.
Once again, it just strengthens exactly
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what you're looking for. It will help
them make a decision for you and find
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you the perfect home and also
might be able to answer any
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questions if they might have to see how
ready you are to be able to purchase.
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So should you get that letter before
maybe talking to a salesperson with a
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builder or even a real estate agent?
Is that kind of the first things that you
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want to get?
Absolutely, I would definitely recommend
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doing that, is getting that so once you are
going, talking a salesperson at the Builder
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or a real estate agent, you already know
how much you're gonna get pre-approved
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for and then they can start showing you.
It definitely cuts down their time, it
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definitely speeds up the process. There
might be just an amazing house out there
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for you, we want to be able to get-get
you that house right away so that way
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it actually just it makes it easier for
everyone to have that letter so you can
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present it, so even when they are finding
that home, they feel confident in finding
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you that home.
Great, do you have anything else to add
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in terms of pre-approval letters?
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No, make sure it definitely that
is signed,
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it has all the conditions, all the terms
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that you had discussed with the
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the specialist. Make sure you're looking
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at the interest rates because that's
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very important. Make sure it's an interest
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rate that you had agreed upon with the
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lender or the specialist at that time. If
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there's any discrepancies, make sure you
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notice that and actually point that out
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right away. There might be some things
that maybe were missed during the
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pre-approval process that could really
impact your approval at the end, so we
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want to make sure that once you get to a
letter you've read it very thoroughly
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and you're okay with everything on that
letter before you proceed.
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Perfect well thank you very much Mo, thank you very much everyone for joining
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us and we'll catch you next time.
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That's another edition of
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Homebuyer's School. Tune in next time
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for more expert tips and tricks and
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visit www.homebuyersschool.ca to bring
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you one step closer
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to finding your dream home.
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As with everything, it would be great if you
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like and share our videos. Also please
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let us know if you have any home buying
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questions you want us to answer.
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