Getting pre-approved for a mortgage can save time and possibly money when you are in your house-hunting process. Lenders will determine the home price you can afford based on your financial conditions through a mortgage pre-approval. Therefore, you can better plan and budget for your home purchase while you are doing research.
When you get pre-approved for a mortgage, you’ll find out:
The maximum amount you can afford to buy a home
The monthly mortgage payment associated with your maximum affordability
Your mortgage rate for your first mortgage term
Applying for a mortgage pre-approval is free and doesn’t commit you to one single lender. However, getting pre-approved does guarantee that the mortgage rate you are offered by a lender will not change for up till 120 days. By “locking in” your rate, you’re protected if interest rates rise while you’re shopping for a home. If interest rates go down during this time, your lender will honour the lower rate.