Buying a Home in Alberta?
Get Pre-Approved for a Mortgage First
Today prospective home buyers and their Realtors should not overlook the benefits of getting pre-qualified for financing. Unless you are an investor or home buyer who expects to buy a home for cash, taking the time to prequalify with a lender offers some important advantages. Consider using this strategy to optimize the time you spend looking at pictures of real estate listings in the Calgary Area.
Financing: A Complex Issue
As the prices of the homes for sale in SW Calgary have spiraled upwards during recent years, a growing number of buyers have discovered benefits in purchasing real estate in Calgary with the assistance of financing packages.
Lenders and mortgage brokers currently offer a variety of programs to help customers realize their dreams of home ownership. By shopping carefully for a mortgage, a prospective buyer who does depend upon financing sometimes saves a considerable sum of money. The buyer may locate mortgages providing competitive rates of interest, fixed interest rates, or other favorable terms.
Yet surprisingly, many prospective home buyers still do not take the time to prequalify with mortgage lenders or banks for financing. This process typically does involve extensive paperwork and it cannot ensure a prequalified applicant will indeed receive funding from the lender (many factors enter into that decision).
The pre approval process may seem daunting to customers who do not know with certainty whether or not they will even locate a property meeting their expectations. Frequently, purchasers wait until a seller accepts their purchase offer before going through the sometimes extended process of qualifying for financing to purchase a home.
Some Advantages of Prequalification
What, if any, benefits does prequalifying for a mortgage offer prospective buyers (and their agents)?
First, taking the time to prequalify often expedites the search for a new home. It prevents shoppers from going through the disappointing process of spending hours to weeks looking at homes they were never able to afford. Few experiences cause greater distress for sellers, agents and home seekers than a failure to close based upon lender financing rejections.
Second, even though prequalification generally does not guarantee financing from a lender, taking this step does usually assist a prospective purchaser in determining the best price ranges in which to focus a home search.
The home buyer will still be searching for homes in Calgary on the web, but now they have a much firmer idea of what he or she can indeed afford. Excellent values in any price range usually don’t remain available indefinitely: home seekers snap up these deals. Prospective property buyers who know their target “search” pricing parameters find themselves in a better position to spot genuine bargains.
Third, in many cases, savvy buyers need to act quickly in order to win acceptance of a purchase offer in a competitive real estate market. By taking the time to undergo prequalification before embarking on a home search, home seekers may convince a seller hoping to sell a home rapidly to give serious consideration to their offer.
Without buyer prequalification, a seller may prefer to “sit” on an offer from a buyer who requires financing while hoping for a more attractive proposal from another interested buyer.
Customer Prequalification Indirectly Assists Realty Agents And Brokers
Experienced real estate agents and brokers often urge prospective home buyers to obtain lender prequalification in order to expedite a property search. A strong undercurrent of self interest lies behind this advice, of course. Lender rejections disappoint everyone, including realty professionals who must renew their efforts to locate a qualified buyer for a property which remains unsold. The real estate broker typically won’t receive a commission unless the home makes it to the act of sale.
Sometimes novice agents will expend considerable time and effort showing properties to potential buyers who have not taken the time to prequalify. While this effort may ultimately result in a closed property transaction down the road, it does reflect inefficient sales practices. In many instances, a substantial amount of work may be put in before finding out the home buyer cannot get a mortgage. By focusing most of their time on prequalified prospective buyers, agents utilize their marketing skills far more effectively.
Primarily, agents who work exclusively with prequalified home seekers don’t expend effort showing properties to prospective buyers without the assurance that a prospect can actually afford the home.
It’s an inefficient practice to say the least. Agents frequently do, although they should not, get caught up working with buyers who ultimately aren’t capable. Prequalification eliminates this problem.
Prequalifying home buyers for mortgage financing benefits for everyone involved in real estate sales in Alberta. Sellers and prospective buyers and their agents all benefit when home seekers target their property searches within realistic financing parameters.
Prequalification may assist this effort! For more information about buying a home or prequalifying for a loan, contact your local trusted real estate professional today!