This is the first in a series of interviews with some of Kelowna’s Real Estate Industry experts. In this video, Brendan Stoneman of Remax Kelowna sits down with mortgage broker, Jewels Ferris of Canadian Mortgage Experts to discuss the difference between being pre-qualified for financing and pre-approved for financing. The difference doesn’t sound like much, but it is pretty dramatic!
Not only does being pre-approved for mortgage financing before you start house hunting give you a clear direction on the price range you should stay within, and help to make sure you don’t fall in love with a home you can’t afford, it also makes the entire process that much easier on everyone when you find a home you want to buy. All of the leg work has been done, and you can rest easy knowing that the deal won’t fall apart at the 11th hour.
The purpose of these videos is to inform you of locally relevant information to make the home buying or selling experience smooth, seamless and as enjoyable as possible. Knowledge equals power in this busy real estate market!
Here’s the transcript of this video:
BRENDAN – Hi, it’s Brendan at RE/MAX Kelowna here and I’m joined by Jewels Ferris, mortgage broker at Canadian Mortgage Experts. So one of the first things I do when I’m getting ready to start house shopping with a client is insist that they get pre-approved for their financing so that we know we’re shopping in the right price range. What does it mean to truly be pre-approved for your financing?
JEWELS – Yeah, so I think that’s a really good point, and especially in the market that we’re experiencing here in Kelowna. With all the new mortgage rule changes, I think it’s so important that clients are pre-approved before they go house hunting. The biggest difference between, you know, a pre-qualification or a pre-approval is if that person has actually asked you for documents and done a thorough review. So, often times, a client will go into the bank and they might ask them some questions verbally and then provide them a pre-qualification with that. You are absolutely not approved for anything with that. So much can come up when you actually take a look at the documents and their credit. So for myself, when I’m doing a pre-approval for my clients, I will ask them for all of the documents upfront that the lender is going to ask for. I’ll pull their credit report, and I’ll do a thorough review of their application so that when we do submit that final approval when the file goes live, I can almost guarantee that they’ll be approved for that based on my lender’s guidelines.
BRENDAN – Mm-hmm, yeah and that’s, I mean obviously, you know, the buyers can shop with a little more confidence knowing that the money’s as close to in the bank as it can be, and also makes that process of after the offer’s accepted so much easier ’cause 90% of the work’s been done in advance.
JEWELS – Absolutely, and the biggest thing is is that you’re not wasting your time as a buyer looking at properties that you don’t qualify for. And I think one of the risks with that is not only finding a property and falling in love with it only to find that you don’t qualify, but more importantly, if things are gonna come up like if you have credit challenges, or things need to be repaired, that gives us time to work on those if we get you pre-approved initially, whereas if you put an offer in and I pull your credit and suddenly there’s a big issue, we won’t have time to fix that for you.
BRENDAN – Mm-hmm, well we’re also seeing in this marketplace a lot of properties are going into multiple offers and having the ability to, you know, myself as the buyer’s agent to say to the realtor these guys have been pre-approved for financing, you know, it does carry a lot of weight in that situation.
JEWELS – Absolutely, and I will provide you with a pre-approval letter for your client that outlines what they’re pre-approved for. And I’ve found, actually, in the past that sellers will actually accept offers that may be lower than others when they have that pre-approval letter along with the offer and they feel confident in the Buyer’s approval.
BRENDAN – Yeah, carries a lot of weight, for sure.