Making Sure You're Really Pre-Approved
Many overlook the relationship with their banker or mortgage broker. Having a strong working relationship with your lender can be the difference between being a successful investor or not.
When you make their job easy they can make your life as an investor feel just as relaxed. A good mortgage broker will do alot more than find you a mortgage or the lowest rate. By working with you they should develop a long-term plan so the type and terms of the mortgages coincide with that plan. If you think about it, it makes sense. Any mortgage broker should be able to get you a mortgage, but the good ones get you the mortgage thats right for you. The same can be said about any specialist in their respective field.
Once the relationship is built continue with your mortgage process by gathering the documents and getting a pre-approval in the range for what you are shopping for. The Calgary real estate market can move very fast, so having a pre-approval can be essential to your purchasing an investment
Here is the important part! A pre-approval does not give you a loaded gun to shoot offers out without a financing clause. A pre-approval is only an estimate of what you should be able to qualify for.
Why is this?
The lender may reject the property for it's value, location, type and condition.
Another important lesson is to get your pre-approval in writing from your broker. When it comes to real estate the verbal agreements are not worth a wooden nickel.
There are a number of mortgage calculator tools available on the web. Although they are a great resource to ballpark what you may qualify for, they are just estimates. Do not use them as a pre-approval amount! (and make sure to use Canadian mortgage calculators)
The Rate Hold
Once receiving your pre-approval make sure and ask for a "rate hold", especially if you believe interest rates are rising. When a "rate hold" is in effect you are protected against interest rates rising. If they do rise during your "rate hold" period you will be guaranteed the interest rate locked in at previously as long as all the conditions are met. Another good thing to get in writing from your lender.
If the rates go down you are not obligated to use that lender, so it is a "WIN WIN" scenario.
The biggest lesson to learn out of this session is to always include a financing condition unless you have the money to close the property 100% for value or it's an absolute necessity to secure the deal you want and is worth the educated risk!
