Cell: 604-855-2521 |

Rate Holds, Pre-Approvals

~ Rate Holds, Pre-Approvals ~

Do ANY of them actually mean something?
I have seen this time and again when I talk to a new clients and they state that they have been "pre-approved" by a bank or mortgage broker and yet on the last day of the transaction closing we have problem getting the property financed

So what is Really a definition of the Pre-approval?

Here are 2 most common answers:
•A confirmation or certificate that gives a borrower the assurance to write a purchase offer without a "Subject to
Finance" clause.
•The process of calculating Debt Service Ratio(DSRs) and reviewing support documents to determine if the borrower meets a particular lender’s guidelines for funding. In studying Canada’s broker-friendly lenders, we’ve found many variations in pre-approvals, but just one common reality: Virtually no lender actually offers a pre-approval that matches the marketplace’s definition.

If you visit your banker and ask him/her what's the difference between Pre-approval and Rate Hold they will tell you that there is no difference.

They are both the same thing. So when you get your pre-approval from your lender, all it means
is that they will hold the rate for the next 60 or 90 days.

When you have an accepted offer in place you will still have to go through the whole approval process where the lender looks at your DSR as much as the value of the property.

To avoid stress while buying a Real Estate, have a discussion with your mortgage broker and make sure that you put a "subject to the financing being approved" before you make your contract firm and binding.

Kind Regards,
Tibor Bogdan


No comments

Post Your Comment:

Your email will not be published

What is a pre-sale?

Example scenario: When the developer intends to build an apartment building and applies for financing, the bank will grant financing under certain conditions. One of them will likely be a certain percentage of pre-sales the developer will need to secure before receiving the funds.
It is common practice for a developer to approach several real estate investors and offer them an opportunity to purchase units of the non-existent building at a discounted price, and on good terms.

Once the number of pre-sales is accomplished, the developer goes ahead with the construction, which will likely take two years or longer to complete. During construction, their marketing team offers the remainder of the units for sale at market value to the public.

If you are a RE investor, you know that it is preferable to be buying at the pre-sale prices, not market value prices.

The question is, how do you get the invitation to buy a pre-sale?
In the past many years, investors have made substantial income by buying at wholesale prices and selling at retail prices even before they needed to complete their purchase. I saw many of them lining up and sometimes even camping overnight in front of the sales center to get a chance to buy at lower prices, but not everyone was lucky enough. You needed to be well-connected to get an opportunity, and you had to act fast.

Today is a bit of a different story. Several projects in the Lower Mainland and Fraser Valley offer really good prices and incentives to secure a unit now and complete the purchase two or three years later. The list of incentives varies from one project to the next. Besides attractive prices, you can get low deposit amounts (5-15%), low or no assignment fees, free updates, a mortgage rate buy-down program, extra parking and more.

A month ago, I helped a few of my clients purchase a presale in Surrey that sold out in 2 days, and I know of another good developer that will be offering a few units for sale as well.

If you would like to know more about these opportunities, I would encourage you to call or email me, and I’ll be happy to send you details on those projects.
Kind regards,
Tibor Bogdan
Century 21 Creekside Realty Ltd.
45428 Luckakuck Way #190, Chilliwack, BC V2R 3S9
cell: 604-855-2521
Reciprocity Logo The data relating to real estate on this website comes in part from the MLS® Reciprocity program of either the Greater Vancouver REALTORS® (GVR), the Fraser Valley Real Estate Board (FVREB) or the Chilliwack and District Real Estate Board (CADREB). Real estate listings held by participating real estate firms are marked with the MLS® logo and detailed information about the listing includes the name of the listing agent. This representation is based in whole or part on data generated by either the GVR, the FVREB or the CADREB which assumes no responsibility for its accuracy. The materials contained on this page may not be reproduced without the express written consent of either the GVR, the FVREB or the CADREB.