What’s the difference?
Pre-Approved
When you apply for pre-approval at a bank, they will ask you questions such as: what is your monthly income? What is your place of employment? What current debts do you have? and more. Based on the information that you provide, they will ‘pre-approve’ you for ‘X’ amount of dollars. This pre-approval is guaranteeing an interest rate for a period of 90-120 days. They have not verified your income or checked your credit rating, so pre-approval does not necessarily mean that you qualify for the mortgage loan amount you hope to receive. This can cause unnecessary stress and frustration if you find the right home, and discover your financing was not verified.
Pre-Qualified
When you are pre-qualified for a mortgage there are several specific items that any financial institution or Mortgage Broker will research and request from you:
A credit check will be performed to find out what your beacon score is (This is a number between 300 and 900 that lenders use to determine your credit rating, the higher the number, the better your credit rating is). Please consult your financial expert on how your beacon score will affect you when buying a home.
Your Income Tax Assessment from the previous year will be requested to ensure that you don’t owe any outstanding taxes (Yes, the Government gets paid first).
They will request your pay cheque statements for the past 3 months to a year, along with a written letter of confirmation of employment from your employer. Self employed individuals will be asked to provide additional information. Please consult your financial expert on what you need to provide as every situation is different.
Tip: Have a signed pre-qualified letter from your Mortgage Broker/bank. This will be invaluable when it comes time to make an offer.
This has 3 main benefits to you:
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Alleviates seller's fears that you will not be able to obtain financing, so they are more likely to take your offer seriously.
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In multiple offer situations the seller will most likely choose the buyer who has the strongest financing in place, if the other terms and conditions are similar.
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This may be used to negotiate a lower price or more favourable terms, as often the security of knowing their home is 'sold' is worth real dollars. This will not be the case for all houses for sale or sellers.
The Benefits of lower interest rates- Get more 'House' for less money!
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Purchase Price
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10 year Average (5 year fixed Discounted)
5.35%
Column 2
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Today’s Best Rate (5 year Fixed)
4.25%
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Savings per month between today and the average discounted rate
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Total Savings between today’s best rate and the 10 yr average rate
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Today’s buying power of 4.25% interest rate to match payments in Column 2
|
|
$200,000.00
|
$1046
|
$911
|
$135/month
|
$8100
|
$229,750.00
|
|
$250,000.00
|
$1308
|
$1139
|
$169/month
|
$10140
|
$287,000.00
|
|
$300,000.00
|
$1570
|
$1366
|
$204/month
|
$12240
|
$344,500.00
|
|
$350,000.00
|
$1831
|
$1593
|
$238/month
|
$14280
|
$402,000.00
|
|
$400,000.00
|
$2093
|
$1822
|
$271/month
|
$16260
|
$459,500.00
|
|
$450,000.00
|
$2355
|
$2050
|
$305/month
|
$18300
|
$516,500.00
|
|
$500,000.00
|
$2617
|
$2278
|
$339/month
|
$20340
|
$574,500.00
|
|
$550,000.00
|
$2878
|
$2505
|
$373/month
|
$22380
|
$631,500.00
|
|
$600,000.00
|
$3140
|
$2733
|
$407/month
|
$24450
|
$689,000.00
|
*All payments based on 5 year fixed as of June 15th, and with 35 year amortization. Savings table is based on monthly payments only and there is additional savings if you go with weekly or bi-weekly payments. Compare column 1 to the last column to show the buying power of today’s rates!
This chart and information has been brought to you by Mortgage Professional Jean-Guy Turcotte. Visit his website today at www.jeanguyturcotte.com
Learn Step #4: Viewing Homes or contact us today!
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