Pre-approval of a mortgage is when your lender, whether it is your personal bank or a mortgage broker, has reviewed all your financial information and has determined the maximum amount of money you can borrow. The advantages to pre-approval include:
- You know how much you can borrow, so you don't waste time looking at properties you can't afford.
- You don't have to worry about rising interest rates while shopping for a home, as usually the mortgage broker will guarantee the current interest rate for 60 - 90 days.
- You have an edge when you make an offer, because the seller knows you're more likely to get a loan.
- You save time when you apply for your loan because you've already assembled your paperwork.