A mortgage pre-approval is a document that basically says you have a willing lender for the mortgage amount which shows your seriousness when putting in an offer to buy a property.

Real Estate financing can be obtained by your neighborhood bank or by the services of a mortgage broker.  Mortgage brokers can shop your mortgage pre-approval request among various lenders.  This process allows you to gather necessary documents and determine the home price you can comfortably afford. 

A loan pre-approval is not a promise by you to use the lender that issues the pre-approval.  It is also not a promise by the lender to lend you money, but states that IF all of your documentation is in order, substantiating your loan request, then you can qualify for the amount pre-approved.

Having a mortgage pre-approval in hand will also convince your real estate agent to work harder for you since you are a serious buyer and not just a “tire kicker”. 

While shopping for a mortgage preapproval, you can also get a feel for the current interest rates you can qualify for as well as other details of the mortgage and which mortgage lender would be the best one to go with.

Burlington, Ontario is a growing community on the shores of Lake Ontario Canada.  Homes in Burlington have rebounded over the last year and are back on a growth trajectory.  Interest rates in Ontario, Canada remain near record lows.  As for other places, getting a pre approved mortgage in Burlington, Ontario has several advantages:

Narrow down homes under consideration by knowing what you can afford
Knowing how much home you can afford also helps real estate agents show you the best possible selection of homes
Sellers are more likely to accept offers – even lower offers – if they are assured you can meet your purchase obligations and follow through with the closing of the sale by obtaining the necessary financing
During the pre-approval process, lenders will see your financial situation and can make you aware of any short comings that you may be able to correct prior to the actual loan closing

Finally, you can have a shorter closing period and even offer this as an advantage to the seller in exchange for a lower price because you have already went through the mortgage preapproval process.

Note that there is a difference between loan pre-approval and loan pre-qualification.  A mortgage pre-qualification simply gives an estimate of how much home you can afford and consequently how much a lender will be willing to loan you.  This is just a simple estimate to show some due diligence prior to shopping for the home.  A loan pre-approval means you have a tentative commitment from a lender that has already seen your application, reviewed your credit file and has given the green light for the amount of money needed. 

Still a loan pre-approval in Burlington, Ontario and elsewhere in Canada is only a willingness by the lender to loan you the amount in question upon actual confirmation of the facts on your application.  Consequently, you also do not have to stay with the lender that pre-approves you but are free to shop other lenders.

A qualified Burlington Mortgage broker can help you find the best loan and lowest interest rates by shopping your loan across many different lenders at no cost to you.

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About the Author:
Samuel Morris is a Burlington, Ontario mortgage expert.  See OakvilleBusiness.com directory for a local directory of Burlington mortgage brokers in Burlington and Oakville Ontario Canada.
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The American dream is still to own a home.  Unfortunately for many people that dream doesn’t last simply because they purchased more house than they were able to afford.  The current housing market is a perfect example of what can happen when people outspend their resources and don’t plan properly.  The problem is that most people simply don’t know how to calculate the amount of mortgage that their income will allow.  Although banks generally are the deciding factor, as we have seen, lenders do not always make the proper decision when it comes to a loan amount.  Though many lenders are much more conservative these days, there are still opportunities to borrow yourself into disaster.

The best indicator of what you can afford is a simple formula of debt to income ratio.  Though not a hard rule, most mortgage providers are looking for borrows whose mortgage will be less than 30% of their total monthly income.  So if you make $60,000 a year, your monthly mortgage payment should not exceed $1500.

The other considerations include expenses that are associated with owning a home.  Things like taxes, insurance and repairs can add up to a considerable sum and many new home buyers are unaware of what these expenses will add up to.  If the total down payment is less than about 20% you will also have to maintain private mortgage insurance until your equity reaches a certain amount.  When these expenses are added up, they must be subtracted from the mortgage amount figured by the gross income calculation and can reduce the amount of the loan that you can afford.

So if we take the example of the person making $60,000 per year, the maximum amount of mortgage they would realistically be able to afford would be around $200,000.  This is based off the average current interest rate of about 5% for a fixed rate 30 year mortgage.  Though it is disappointing to not be able to afford the home you wanted, buying one you can afford will leave you happier in the long term.

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About the Author:
Submitted by Magnus Smith, a junior copywriter for Ratelines.com. Since 2004, Ratelines’ goal is to provide consumers and borrowers alike with the proper tools and information about cd rates and savings accounts.
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Please Note... All links within articles are placed by their author-owners and not by this blog.Products with in those links may or may not be the best in the world.If it sounds too good to be true it could be a scam.Articles are posted for their info,ideas and or entertainment value only.

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