Calgary Mortgage Approval v/s Pre-Approval: What is The Difference?
The Calgary home buyers are aware of the two most common terms mortgage pre-approval and mortgage post-approval.
Though these two terms appear similar they are not the same. It is important to understand the difference between the mortgage pre-approval and mortgage post-approval for all home buyers especially for first-time home buyers in Calgary to save time avoid surprises and help them make informed financial decisions during their home-buying journey.
What is the Difference between Mortgage Approval and Pre-Approval?
Understanding Mortgage Approval
A mortgage approval in Calgary is the official commitment of the lender to lend you the mortgage amount for a specific property. This happens after they have found a home and made an offer, the lender has reviewed the value and legal status of the home and the home buyer has submitted all the required documentation.
Unlike pre-approval, the mortgage approval depends on the property appraisal, the condition, price and title status of the home and updated financial status. Even if the borrower is pre-approved their final mortgage approval can still be rejected if they take new debt like a car loan, change jobs, drop in income or the home does not pass the lender’s property checks.
Understanding Mortgage Pre-Approval
A mortgage pre-approval is the conditional promise of the lender to lend the money based on the current financial status of the borrower. It is not a guarantee of a mortgage but it does show how much one can afford to borrow, an estimated interest rate and the maximum home price the borrower can consider.
To get a pre-approval the borrower will need to provide the income proof, employment details, credit score and report and information about their debts and assets. Most pre-approvals in Calgary are valid for 90 days to 120 days and they often include a rate hold, protecting the borrower from interest rate increases while they shop for their home.
Mortgage Approval v/s Pre-Approval in Calgary.
Here is a detailed comparison between the two based on certain features including –
- Time: The pre-approval is done before house hunting and the mortgage approval is done after making an offer.
- Purpose: The main purpose of pre-approval is to estimate how much you can borrow. Mortgage approval aims to confirm the loan for a specific home.
- Validity: The pre-approval process is valid for 90 days to 120 days. The approval is valid based on property and current finances.
- Conditions: The pre-approval is based on initial documents and the post-approval is the final check on income, credit and home.
Why both are Important?
A pre-approval makes the borrower a serious buyer in the eyes of the seller. It helps one move quickly when they find the right home. However, only the final mortgage approval guarantees that the lender will fund your home purchase. Without mortgage approval, the borrower cannot close the deal even if they are pre-approved.
If you are buying a home in Calgary, aim you get pre-approved first then work with a professional and experienced mortgage specialist to ensure seamless transaction till full mortgage approval.
