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Thursday, October 31, 2013

Why bank preapprovals are not as good as a mortgage broker's.

It's so satisfying to be able to beat the banks at their own game.
  I was in a meeting recently when it was mentioned that all preapprovals by this lender are underwritten before issued. I've known this for some time but a question came to mind. Do banks underwrite their preapprovals. When you go to a bank and fill out an application does anyone check over the numbers and your credit report and see how much you really can afford?
     I asked this question and was told that banks don't underwrite their preapprovals. This is the reason why you are preapproved for $400,000 and when you make an offer on a house for $400,000 it may be declined by the bank. If they took into account the $500 a month car payment that you have they could have given you a more accurate pre-approval anmount of $350,000.
     I should caution you. Not all lenders do this. If you are concerned you should tell your mortgage broker that you want a pre-approval that has been underwritten. This limits the number of lenders it can be sent to but you can shop with confidence with this document in hand.
  For further information contact David Cooke at www.davidcooke.ca 
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