Posts Tagged ‘pre-approval’
Mortgage Pre-approval
After my last post on lenders not offering competitive rates for their mortgage preapprovals, I finally have a lender willing to step up and offer a great interest rate with 120 day rate hold. If you look at the 5 interest year rate most lenders are offering these days they tend to hover around 4.09% and they may or may not offer preapprovals at that rate. I am happy to announce I am now able to offer my clients 3.99% for a preapproval and the rate will be held for 120 days. This is not a "No Frills" mortgage and has all the bells and whistles you would expect. If you are looking to by a house in the next 3 months it would make sense to get your rate locked in today. Keep in mind if rates go down between now and the time your house closes, you will get the lowest rate at that time. Also keep in mind this rate is based on approved credit and income.
Mortgage Pre-approvals may not be around much longer
As a mortgage broker one of my primary roles is to get a mortgage pre-approval for my clients before they start their house hunt. This accomplishes two things for homebuyers. First, it let's them know exactly how much they can afford so they don't waste their time or their Realtor's time looking at houses out of their price range. Second, it locks in their interest rate for 120 days and protects them from increases in mortgage rates. Both of these functions are very important in the home purchase process. Unfortunately, although this is a great service for home buyers it is not so great for the banks lending the money and many of them are taking steps to change the process. Why are the banks against pre-approvals? Well, it costs the banks a significant amount of money to hold your rate for 120 days. Canadian Mortgage Trends reports that it costs the banks between $900-$1200 to hold (hedge) a $100,000 mortgage for 120 days. Obviously the higher the pre-approval the more it costs. So before you even sign the mortgage papers, the bank has already spent about $1,000 on you. This wouldn't be so bad if you actually used that bank ...
