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When should I get pre-approved for a mortgage? (how long it lasts and how many times you can get approved)

“Always pick your yard based on your Summer lifetstyle.”


March 22, 2018 - Karl Yeh

Wondering when to get pre-approved for a mortgage during the home buying process? In this episode, we discuss when and how far in advance of buying a home should you look to get
pre-approved. We also explore how long pre-approvals last for, what happens if your financial situation changes and how many times you can get approved. 

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Karl Yeh:

Hi everyone, and welcome to another edition of Homebuyer's School.

Today, I'm joined by Mujtaba Syed, Manager -  Mobile Mortgage Specialist with TD Canada Trust.

Today the question we're going to answer is [00:00:30] :

When should I get pre-approved for a mortgage?

Mo, take it away. When should I get pre-approved?

Mujtaba Syed:                  

Absolutely, Karl.

The best time to get pre-approved for a mortgage is technically when you're shopping around.

You want to do it ideally before you're shopping around, so you can get an idea of exactly how much you can afford, what your monthly payments are, what your monthly obligations are.

You want to make sure that it's comfortable for you that it fits in your monthly budget that you've set for yourself.

Definitely you want to be able to do that before the shopping part [00:01:00].

Karl Yeh:                             

How far in advance to get pre-approved before buying a home?

Mujtaba Syed:                  

Technically it could be the day you decide to go shopping, the day prior.

There's no really set rule or time, but ideally we want it to be the first step.

We want it to be the first step is to get pre-approved for a mortgage before you start shopping around, so you can have a better idea.

It could factor into different areas in the city you might want to be able to move to, different styles of homes that you're looking into.

It could change a lot of different things, [00:01:30] so obviously you would definitely, definitely want to be able to get pre-approved before we even step into that market or speak to a real estate agent or anything of that sort.

How to finance your home

How long does a mortgage pre-approval last for?

Karl Yeh:                             

When you are, let's say, pre-approved, how long does that last? Does that actually expire?

Mujtaba Syed:                  

That's a great question.

A pre-approval lasts for three months. After three months, it expires, but if you feel like three months isn't a long enough time period for you, we can always, always just re-approve [00:02:00] you, pre-approve you, as long as the situation hasn't changed for you financially.

We could keep that pre-approval going as long as possible. Some things might change in that time. Rates might change. They might go up. They might go down.

The other reason why I think a pre-approval is such a great thing to do is because if rates are good right now, it locks in that rate for you.

Even though the pre-approval is for three months, we can hold the rate for you for four months.

In a very competitive interest rate market, you want to get a pre-approval just to maybe hold that rate even though you [00:02:30] might be two months away, you might be a month away, from finding a house.

We want to be able to get that interest rate locked in for you, so you can actually benefit from it.

What if your financial situations changes after getting pre-approved for a mortgage?

Karl Yeh:                             

What happens if, after those three or four months, that things change? Maybe not for you, but just situations change, the next step would be you're just locked into another rate, right? After the next three months? Is that correct?

Mujtaba Syed:                  

The way it works [00:03:00] is that if situations have changed for you even on a personal level, we will reassess it once again, like I said.

Our pre-approval is important because we look at everything. We look at your situation, we look at the market situation, we look at the interest rate situation.

Let's say from the first time you got pre-approved to the second time, things have changed, we will reassess it at that time and once again talk about what works best for you. You might change your amounts.

You might get pre-approved for more. You might get pre-approved for less.

That's a very important discussion to have [00:03:30] during that process, but it's nothing to worry about.

If you get pre-approved, we don't want you to rush and find a house within those three months.

A pre-approval can always be extended. Your situation might've changed, but we can always change a situation to kind of meet your needs and have a little bit more of a real discussion with you.

Never feel rushed that you need to buy just because you feel like your pre-approval is expiring.

Karl Yeh:                             

How many times can I get pre-approved?

Mujtaba Syed:                  

As many times as you want.

Technically until you're ready to purchase. [00:04:00] Once again, we want this to be a very enjoyable experience.

We want you to be able to find your perfect dream home, and sometimes it takes a little bit longer to get that dream home. We don't want you to feel rushed.

We don't want you to feel that you were forced into a situation or something.

It is going to be your ideal home. It's going to be one of the biggest purchases in your life that you'll do, one of the biggest investments you're going to get into.

We definitely want to make sure you find the absolute best for yourself [00:04:30].

Karl Yeh:                              

Does the amount of times that you get pre-approved, does that affect your credit score?

Mujtaba Syed:                  

It really just depends on how the bank is doing it.

Sometimes when you get pre-approved for a mortgage some banks might do a soft credit check.

Just means that they're just doing an inquiry. Some banks might do a hard inquire, which just means that they're actually applying for a mortgage.

Any situation, if you're applying, it could affect how many times you're applying with different banks. Ideally if you're with the same bank it shouldn't affect [00:05:00] your score that much.

Every time a lender or a bank looks at your credit bureau, they actually hold it for 90 days. After the 90 days, they might need to do another one, or they might choose to keep the same one. It really just depends on situation to situation and lender to lender.

Karl Yeh:                             Perfect. Do you have anything else to add?

Mujtaba Syed:                  

No. I think that's pretty much it. Like I said, a pre-approval is very important, and like I said just get out there, get pre-approved, and feel confident in knowing [00:05:30] how much you're pre-approved for.

Karl Yeh:                             

Well, thank you very much Mo. Thank you very much everyone for joining us, and we'll catch you next time.


Your turn:

Let us know if you have additional mortgage questions or home buying questions that we can answer by submitting them in the comments section below. 

Homebuyer's School publishes new content weekly so subscribe or check back regularly for the latest information, strategies and tips from homebuying experts. 

About Mujtaba Syed:

Mujtaba is an experienced mobile mortgage specialist with a demonstrated history of working in the banking industry. Skilled in Negotiation, Commercial Lending, Banking, Sales, and Credit Analysis. Strong product management professional.

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