Thursday, July 25, 2013
I'm pre-approved, is that enough to continue with my purchase?
While staying afloat in Toronto's ever changing market, be cautious when thinking about waiving your conditions. The onus is on you if your lender denies your loan based on approved value for the specific property.
Becoming pre-qualified only entitles you to find out how much you can be approved for based on your income/debts etc. The bank still must take into account how much they feel the proposed property is worth.
During most transactions the agreement is often conditional upon financing, however with the speed and competition of the market place many times purchasers choose to remove their conditions.
If the lending institution requires an appraisal of a property, they have the option to forego the loan based on their estimated value. This could leave you scrambling with your mortgage broker to find a new loan, and less leeway securing your low interest rate and term conditions.
When finding your financial institution discuss information with them ahead of time by asking how long in advance they require before coordinating an appraisal on a proposed property. Also, budget for reserves in the case that you decide to go in on an offer without your financing condition.
Posted by ally at 8:49 AM