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Why do I need approval before an offer?

Unraveling the Importance of Pre-Approval Before Making an Offer

The best course of action is to obtain pre-approval before applying for a mortgage. Before you examine potential houses, the bank will pre-approve you to ensure that you are qualified to buy a property. There are numerous justifications for completing the pre-approval beforehand, some of which are as follows:

Confirm your eligibility to buy a home:

  • Most home sellers anticipate that anyone visiting their property will have this finished.
  • When compared to offers from buyers who have not been pre-approved, your offer will be more enticing to the seller.
  • This will automatically make your offer more appealing in the case of multiple offers.

Focus your search on suitable houses:

  • It enables the realtor you are dealing with to ensure that you are viewing the appropriate properties and are not wasting time viewing ones that are out of your financial reach.
  • Once a seller accepts an offer, the timing for the conditions is usually constrained, and sometimes only the final approval by a mortgage insurance company like CMHC is granted, leaving little room for pre-approval.

Know what needs to be done in advance:

  • If you apply in advance, you will know what needs to be done if you were not pre-approved or were not pre-approved for the amount you wanted. For example, paying off a specific loan or settling an outstanding bill on your credit history that you were unaware of.

Streamline the mortgage application process:

  • The bank will need a completed mortgage application and other financial papers. Depending on your employer, the CRA, and whether you preserve records of your documentation, this process alone could take days or weeks.

Consider the following scenario, for illustration: You made an offer on a house, the seller accepted it, and you have seven days to complete your final financial approval. You must now complete the application, provide all necessary financial documentation, have the mortgage underwriter approve your application, and send your offer together with these documents to the mortgage insurer, who must then review the file and return all necessary paperwork to the bank. The bank must then finish it and your approval letter to fulfill the condition clause. Keep in mind that since most establishments are closed on the weekends, your original seven days are automatically reduced to five. Financial institutions just don’t have the time to perform all of these tasks in 5 days. You must be ready since this is the single largest investment you will ever make.

Usually, when this occurs, the offer’s deadline expires, and you must ask for an extension. The seller has three options: to accept your extension, withdraw your offer, and relist the property, or withdraw your offer and accept another offer. This has a negative impact on the listing. The majority of sellers want the pre-approval to be finished ahead of time because they are not willing to take this risk. Most buyers’ agents will not submit an offer for a buyer who hasn’t been pre-approved for all of the above reasons and it could negatively impact their business and reputation in the field.

Hello there! I’m Alisha Caillie-Fleet, a seasoned Real Estate Agent located in Halifax. With a sales history dating back to 2014 across Nova Scotia and Ontario, I bring a wealth of expertise to the table. My specialization includes residential properties, investment opportunities, and military relocations. I’ve wholeheartedly committed myself to honing my skills to ensure that your experience of buying or selling a home is seamless and free of stress.

Being a military spouse, I also have personal insight into the challenges military families are confronted with. As a result, I’ve developed a tailored approach to cater to the unique demands of the DND moving process.

Let’s establish a connection and have a conversation about your real estate goals!

Alisha Caillie-Fleet – Realty in Nova Scotia | (902) 489-4911 | 1959 Upper Water St #1301, Halifax, NS B3J 3N2 | alishasellshfx@gmail.com | BGRS Approved