You’re pre-approved! Here’s how to organize your time

You’ve been pre-approved! Now that you have cleared this first hurdle in the home buying process, the real work begins. You might be feeling a little overwhelmed or unsure of how to structure the time you have been given. While your pre-approval will not be the exact same as someone else’s, most home buyers need to complete the same tasks. Here’s a quick review of the main items to get out of the way now that you’re pre-approved, and how you can schedule your time!

How long does a pre-approval last?

In Canada, a pre-approval typically lasts for 60 to 120 days. Each lender sets their own policies in terms of how long a pre-approval is valid before it expires. There are a couple main reasons why pre-approvals have these time limits. First, there’s the fact that a pre-approval is based on your current financial situation. After a certain amount of time, lenders feel there is a larger chance that your circumstances will have changed, and your pre-approval will not fit you anymore. Having this time limit helps both lenders and yourself stay up to date on what you can potentially afford. 

Second, lenders want to ensure their pre-approvals are consistent with current market trends and rates as much as possible. Even though being pre-approved is not a guarantee of financing, lenders still want them to accurately reflect present-day conditions. If interest rates change or the market starts to move in a different direction, your pre-approval may not be fully up to date on what is available.

Finalize your budget and housing needs

The early days of being pre-approved should be all about determining your housing needs and your budget. Of course, your pre-approval gave you an idea of the amount you may qualify for in a mortgage, but that should not automatically be your default budget. Pre-approvals are estimates, and cannot be considered 100 per cent accurate. Plus, a pre-approval doesn’t take your other expenses into account, and assumes your mortgage is your only priority. This isn’t true for a lot of people, as most of us have other expenses such as car payments, childcare costs, or student loan repayments. Use your pre-approval as a starting point, but be sure to tailor your budget to your circumstances.

Once you know your budget, you can start to pin down your housing requirements. This includes things like location, size, access to public transport or amenities, and other essential items. It should not include your “nice-to-haves” or things that are not critical to your housing search. Once you narrow down what you can afford, and what you need, you can begin your actual housing hunt! 

Find the right home

Finding the right place to call home is the most exciting part of the home buying process. Your real estate agent will use your budget and criteria to find listings that match your needs. It’s important to only view homes that fit your budget and requirements to avoid wasting valuable time in the market. You should keep notes on homes you view so you can easily compare your options later, considering the pros and cons of each. It’s important to be efficient, but not hasty, in the market. You don’t want to make an offer on a home you don’t truly want just to get it out of the way. However, you also don’t want to dawdle, as competitive markets mean homes may not stay available for long.

You should also confirm your down payment amount at this point. Now that you have your budget, you should be able to decide how big of a payment to put down. If you have the resources to do so, we recommend contributing a full 20 per cent. This can make you seem more attractive to lenders, eliminates the need for mortgage default insurance, and results in a smaller mortgage.

Make your offer and confirm financing

Once you find the house you want to call home, it’s time to make an official offer. Work closely with your real estate agent to determine the right offer. You want to appeal to the seller while also protecting yourself and your budget. This means striking the balance between a competitive offer and your affordability. As professionals with market experience, your agent can help you find that perfect number.

If your offer is accepted, you need to confirm your mortgage financing! This means securing a mortgage approval from your lender. Remember, your pre-approval was not a guarantee of financing. You now need to confirm your mortgage funding and ensure you can receive the necessary funding. Once that is done, you will be well on your way to homeownership!

Organizing your time once you are pre-approved can be tricky. While everyone’s experience will be slightly different, this is a brief overview of how you can start to divvy up your tasks and timeline. If you have any questions along the way, be sure to reach out to your local mortgage broker! We are here to guide you through the entire home buying process, no matter where you are in the journey.

If you have any questions about your mortgage, give us a call at Centum Home Lenders! You can reach us at 506-854-6847, or get in touch with us here.