Toronto Real Estate - Toronto the Good

The Toronto Sun
Friday January 16 ^th, 2004
Page: H18 Section: Homes
Byline: Rob Andrusevich, Special to the Toronto Sun

Are you really in the hunt for a new home?

Search you may, but if you don't have your financing lined up or the
amount of borrowing power you were counting on, your dream home might slip through your fingers.

A word of advice - if you're serious about the hunt for a new home, get your financing pre-approved.

According to Invis, Canada's largest independent mortgage brokerage, homebuyers compete for properties and demand continues to outweigh supply.

Having a mortgage pre-approval and lining up the necessary documents is important to ensure buyers land the new home they desire. Housing starts are at a 14-year high according to the Canadian Mortgage and Housing Corporation, buoyed by low interest rates.

"I think it's important to go for pre-approval first," said Jim Rawson, regional sales manager for Invis. "Some people don't have a clue when they're buying. It's important to know what you can afford, the top dollar.

The process can really be short. It's making an application to see what you qualify for."

Having your pre-approval before making an offer is important because it can detect things like credit card debt which reduce the amount you qualify for.

Identifying these issues allows time for a client to take care of them and often improve the amount they qualify for.

"You can be surprised what shows up on your credit record, it sometimes catches mistakes (on your credit record)," Rawson said.

A pre-approval is an arrangement where a financial institution will guarantee a certain interest rate for a specific length of time. But it doesn't guarantee financing - a more thorough check is made at the point of offer, so it's important to have accurate information right from the start to avoid surprises Rawson said. It's helpful to provide all possible documentation to support items like accurate income figures up front so there aren't unpleasant surprises he said.

Buyers also need to be aware the lending institution must also approve the new home itself, and in some cases it doesn't.

There's more to pre-approval than number crunching. "There's a counseling aspect to this. One thing I tell people is I don't want you to go in poor," and purchase a place they can't afford over the long term Rawson said.

"It's important to say 'this is what I'm looking at buying' so the mortgage broker can help you with that process."

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