PRE APPROVAL FIRST

Most mortgage lenders take the guess work out of applying for a loan by figuring out for you the amount you can afford to borrow. Then, they give you a printed document stating the maximum mortgage amount you qualify for based on your particular finances and income.

Mortgage pre-approval establishes your price range and strengthens your buying position by letting the Seller know that you have already been approved for the loan. It can also ease time constraints once the purchase agreement in signed between Buyer and Seller.

As soon as you start talking about buying a new house - either a first house/apartment or a move-up property, go to your bank to confirm what kind of financing they will approve for you.  Then, go to the bank down the street, then go to a mortgage broker for their offers.  Pay attention to more than just the amount - ask what interest rate they will use for your financing and what the pre-payment options and penalties are. Often, if a lender feels you are a risk, they will charge you a higher interest rate.  Some lenders will be tougher on you if you default than others as well. Read the fine print.

Note 1: A pre-approval is not the same as an approval.  Your "pre-approval" is as accurate as the information you provide the lender at the time you complete your application - which may be 2 months before you find a house. As well, the lender will probably not have confirmed all of the information you gave them.  Once you find the property you love, if possible include a financing condition into your offer so that you can get that pre-approval converted to an Approval and always advise the bank of any changes in your status. If the bank finds in its final check of your application that your job is not as indicated, your down payment is not as indicated, that your credit check is not good - they may either revoke their approval or offer you a smaller loan possibly at a higher interest rate. 

Note 2: don't allow the lenders to request a credit check on you until you decide which lender you will use. Too many credit searches hurt your rating.

Ask Marnie for contact information of various banks and mortgage brokers as well as current interest rates.  Remember, we are in a time of historically low interest rates.  At the moment they are expected to stay low but be aware that if interest rates double (which would still mean they are very low compared to say 20 years ago), your mortgage payment may double - depending on where you are in the life of your mortgage.  Be careful not to become house poor because you want to enjoy living there - not at work!