What does Preapproved mean?
- A pre-approval is a preliminary evaluation of a potential borrower (You) by a lender (Bank) to determine whether they can be given a pre-qualification offer. Pre-approvals are generated through relationships with credit bureaus which facilitate pre-approval analysis through soft inquiries. Pre-approval marketing can provide a potential borrower with an estimated interest rate offer and a maximum principal amount. In summary it gives you a spending amount and a starting point.
Do I still need a "finance condition"?
- In short...Yes. A Pre-approval is only a quick snapshot of your mortgage qualifications and although the lender is confident enough in allowing you to shop and put forward offers, it will still need a final approval on the specific property. This only takes place once your offer is accepted.
Does every property need an appraisal?
- Depending on the amount of your down payment, either CMHC (mortgage insurer) or the lender itself will want to confirm that the property you are in fact purchasing has a value that supports the amount you are offering. This can be done electronically or in person with a certified home appraiser.
The video below will summarize the key points of a pre-approval and the importance of communication between your Realtor and your Mortgage Broker.