BUYING WITH CONFIDENCE by Georgia Stamatakos, TD Canada Trust

The best way to begin looking for a home is to get PRE-APPROVED for financing before you look at a single property. Unfortunately, many people think that “shopping for rates” after they buy is the best strategy, and miss out on the many benefits of getting pre-approved.

Pre-approval is more than getting a promise of the lowest rate. It’s having a professional do a quick but thorough analysis of your finances; it’s having a clear sense of all the costs you’ll incur when purchasing a home; and it’s ensuring that your plan is secured for you in the event that rates go up. Most importantly, by getting the opinion of someone who knows and understands the specifics of your planned transaction, you get a partner to help you throughout the buying (and even the selling) process.

Sound like a lot of work? It isn’t. An experienced mortgage professional can guide you through the three steps of the process very quickly. They are:

- income verification
- down payment verification, and
- a review of your credit history

This process seems easy, but a real pre-approval goes beyond these three steps. If you get a pre-approval through someone that doesn’t spend the time or effort to uncover your complete financial picture, your true buying power may be hidden by things like high credit card balances, late payments, or untapped resources. If the properties you’re looking at are still more expensive than what it seems you can afford, a good mortgage specialist will look at strategies that could help you achieve that higher price, like using the RRSP program to increase down payment, using part of your down payment to reduce your other loan balances, or looking at different products to make the home more affordable. Sometimes people learn they can afford more than they ever imagined!

Pre-approval also identifies potential issues with your planned transaction. By reviewing your debt load, finances, employment history and other factors, a mortgage professional will be able to highlight areas that may require attention before you buy (such as building up a down payment, settling past due accounts, or paying down existing debt). The costs of buying and owning are added into the mortgage cost of the home, to give you a real sense of what you can afford and not just what you qualify for.

Experienced homeowners should also get pre-approved if they are upgrading from their current home or thinking of investing in a rental property. Changing finances, debt accumulation, or property values may affect what they can afford, how they can structure it, how it will affect their taxes, and most importantly, how much they need to spend – and pre-approval will hold the rate or discount they are counting on!

Bottom line: Don’t wait until you make an offer to ‘shop’ for rates, and don’t settle for someone who promises to hold a rate for you and tells you to worry about the paperwork later. Get pre-approved with an experienced mortgage professional and arm yourself with the confidence and security to go after the home of your dreams.