Have you got the pre-approval letter for your home loan? If yes, congrats on you for completing the first stage of buying your dream house. Now you get a pre-approval for your mortgage that will help you to buy your new home.
However, we can also say that a pre-approval letter is like a letter of offer to buy your dream house. The mortgage broker will send you an email containing all the conditions required for getting a pre-approval. But if you need a pre-approval mortgage Richmond Hill, you need to know some things about your pre-approval letter.
1. Priority amount
You will see a priority amount mentioned in your pre-approval letter. However, you must be familiar with this priority amount because it can be more than your mortgage amount.
It will be shocking for you that the priority amount can be 1.5x more than your mortgage amount. However, it will be the maximum amount for the bank that prioritises the home loan amount.
Suppose you get a mortgage of $500,000 for the home worth $700,000; the priority amount will be $750,000. So from any sale, the bank will have access to the first $750,000.
That is why it will become uneasy for you to get a second mortgage for the same property. Yeah, it is a higher amount that can put a substantial financial burden on your shoulders.
But some other banks have an absolute priority amount. If your plan is getting a second mortgage for the same property, the priority amount must not be your concern.
2. Expected interest rate
You must be familiar with the expected interest rate on your pre-approval letter. However, most of the banks calculate the interest rate using the non-discounted floating rate.
So that is why you do not have to overlook the expected interest rate on your pre-approval letter. However, the non-discounted rate is around 6% that will shock you.
So that is why you have to put a closer look at the regular payments. Make sure that the interest rate must be equal to the amount you expect.
If the interest rate is higher than your expectations, you can negotiate. Getting a pre-approval mortgage Richmond Hill with an expected interest rate will help you save some cash to pay off other debts.
3. Acceptance
Some pre-approval letter will require acceptance to confirm that you want to take the mortgage. However, it is like a confirmation that you really want a mortgage to purchase your dream house.
But if you checked all the conditions and finalised the mortgage, signing this acceptance is worthless.
4. Conditions
You will also see a very vital section in your pre-approval letter named conditions. However, these conditions are the assurity that you want a mortgage to buy your dream house.
Read all the conditions carefully with both eyes open. However, these conditions will include confirmation of the insurance and a signed purchase.
Remember that some banks will not provide you with the mortgage if you can not take out their life and health insurance.
If you do not want to take out their life and health insurance, the bank will not offer you the mortgage. Taking health insurance is the right policy for your life.
5. Expiration date
Keep in mind that most of the pre-approval letter get expired after two months. But do not worry, you can renew it easily by confirming that there is no change in your financial status.
However, you can renew your pre-approval two times only. If you apply online to get pre-approved, you only have to updates some details and deliver new documents to restore your pre-approval letter.
So you do not have to take any tension about the expiration date of your pre-approval mortgage Richmond Hill letter.
Wrapping up
So here are things that you need to look at in your pre-approval mortgage Richmond Hill letter. However, getting a pre-approval letter is the first stage of purchasing your dream house. You do not have to worry about these things but only understand them carefully and take your first step.
