Are you looking for a pre-construction condo or home? Consider pre-approval for your mortgage when you want either a new pre-construction condo or house you’re planning to buy. That does not mean a simple 5-minute talk with your bank. You have to first be pre-approved before you even think of looking around.
Many buyers mistakenly assume pre-approval isn’t necessary until they’ve found a specific unit or build they want to purchase. But taking that casual approach can end up costing you big time, both in terms of stress and straight-up cash. If you want to secure the best possible rates, incentives and avoid unexpected roadblocks, getting an early mortgage pre-approval is an absolute must.
Not convinced yet? Let me break down the key benefits that’ll have you speak with a mortgage pro ASAP.
Benefit #1: Locking in Your Rates
One of the biggest perks of going through the full pre-approval process early is the ability to lock in an interest rate. It is what’s known as a mortgage rate hold. This essentially guarantees you’ll receive the going rate offered on the day you started your pre-approval for a set period of time, typically between 90-120 days.
If you wait until the last minute to start your pre-approval and rates suddenly spike, you’re out of luck! You’ll be forced to qualify at those higher rates. They throw a major wrench into your overall purchasing power and monthly budget calculations.
Given how volatile rates can be these days, the simple act of rate locking offers incredible peace of mind. You eliminate any risks of unforeseen hikes. These hikes can derail your plans or stick you with higher borrowing costs than you initially anticipated.
Benefit #2: Truly Understanding Your Budget
I can’t emphasize this one enough. Get pre-approved before you start your search for new preconstruction homes or condos, not after! Why? Because that pre-approval gives you an accurate, up-to-date assessment of your maximum purchase price and monthly payment thresholds.
Too often I see prospective buyers waste time looking at properties or preconstruction pricing that are well above their affordable range. That’s an easy way to get your hopes up before the bank inevitably shuts down your dreams by declining your application.
With a mortgage pre-approval in hand, you have a clear budget defined. It saves you from exploring options outside your qualifications. Shopping with your certified budget acts as a secure guard. It keeps you in your personal strike zone rather than swinging wildly at things that’ll never work out financially.
Benefit #3: Detecting Credit Issues Early
Did you know that going through the full mortgage pre-approval process essentially puts your entire financial profile under the same microscope as the final approval stage? It’s like a free audit. It can detect any credit issues, documentation problems or income verification snags. These issues would otherwise show up later.
Catching these potential roadblocks in advance is huge! Not only can your mortgage advisor provide guidance on ways to improve your qualifications, but you’ll have plenty of time to actually implement those strategies. You can work on boosting your credit score, pay down debts, or get whatever additional paperwork is required ahead of your closing date.
Trying to sort out issues like these at the last minute puts you in desperation mode. You may be forced to make rash decisions. They can impact your interest rate or purchase altogether. By getting pre-approved upfront, you eliminate those unnecessary headaches right out of the gate.
Benefit #4: Access to Exclusive Incentives & Pricing
These days, many pre-construction builders, developers and mortgage lenders offer special VIP pricing and incentives exclusively for pre-approved buyers. They know you’re a much safer investment from their end. It allows them to take on less risk by prioritizing folks with their ducks in a row.
These kinds of incentives can include things like:
- Discounted mortgage rates below market average
- Reduced monthly carrying costs
- Increased incentives or credits for upgrades/customizations
- First crack at new inventory releases or buildings
- Flexible deposit structures
While not necessarily a monetary benefit, being able to take advantage of these VIP perks can add up to big savings over the life of your mortgage. Not to mention how clutch things like priority access can be. You know how competitive pre-construction markets are where units get snapped up quickly!
Just remember that many of these exclusive offers are only valid for buyers who have gone through a verified pre-approval at the onset. If you wait until later in the process, those appetizing incentives are off the table.
Early Mortgage Pre-Approval is a Game Changer
Wondering why early mortgage pre-approval matters? Let’s break it down. At best, it locks in low rates and gives you a clear budget for your home search. It helps you spot potential issues early and gives you solutions before they become problems. It also helps you unlock special discounts and incentives when you are finally looking at condos or homes with your realtor.
What’s the downside of skipping it? You risk rate hikes, unexpected surprises, and missing out on great opportunities. Whether you’re looking at new preconstruction homes or condos, early pre-approval should be your first step. You should not start shopping without consulting with an experienced mortgage professional.
This step sets a solid foundation for your budget. It ultimately protects you from unforeseen issues. An ounce of prevention is worth a pound of cure. So get that pre-approval at the beginning and watch as it opens up your options rather than limits them down the road.
