Before you start a search for a new home, you need to know what you can afford.
With the introduction of the mortgage stress test rules in January 2018, qualifying for a mortgage is more challenging than it used to be. You may believe you have a good credit rating and a solid employment history, but only a lender or mortgage broker can confirm, based on your current expenses and debt level, what mortgage amount you can be pre-qualified for.
Most pre-approvals are valid for 120 days, so if it takes you longer than that to find a home you want to purchase, you may need to get an extension or go through the process again.
Including your mortgage pre-approval letter at the time of making an offer strengthens the offer. Sellers are more confident that you will have the ability to close on the property, should a firm deal be accepted.
Once you have made an offer to purchase, the lender/mortgage broker will arrange for an appraisal, to ensure that particular property is worth the amount you propose to pay, before they will agree to forward the funds to you. This is why you should include with the offer a condition of financing approval.
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