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BMO Financial Group
BMO Bank of Montreal

BMO Bank of Montreal

February 13, 2012 06:00 ET

Know Your Limits: Mortgage Pre-Approval Gives House Hunters Peace of Mind

BMO offers tips and advice on next steps for pre-approved house hunters

TORONTO, ONTARIO--(Marketwire - Feb. 13, 2012) - With the busy spring house hunting season only weeks away, BMO Bank of Montreal is recommending house hunters get a head start on planning by getting pre-approved for a mortgage before setting out to lock down the perfect home.

"Whether it's a buyer's first mortgage or fifth, getting pre-approved for a mortgage is one of the first things you should do when you decide to buy a home - even before you start your search," said Laura Parsons, Mortgage Expert, BMO Bank of Montreal. "This will give you a better idea of how much you can borrow, how much home you can afford and what your monthly payments will be. When it comes time to make an offer, you'll be able to act more quickly knowing that your financing is already in place."

Ms. Parsons added that if you choose a fixed interest rate, you are guaranteed that rate during the 90-day pre-approval period - keeping you protected if interest rates rise. Furthermore, Ms. Parsons advised prospective home buyers to choose a 25 year amortization, which can save Canadians thousands of dollars in interest rate costs over the life of the mortgage.

BMO offers the following advice to pre-approved house hunters:

Once the mortgage has been pre-approved, many more important decisions need to be made in fairly short order.

Before house hunting begins

  • Choose a realtor. A real estate agent can help you find a home to suit your needs and provide expert insight about location, price and neighbourhood services and amenities.
  • Make a list of must-haves and rank them in order of importance, including access to transit, schools, sports facilities and shops.
  • Have a full understanding of your budget. The cost of purchasing a new home includes more than the asking price. There are costs associated with moving, lawyer's fees, and property taxes, to name a few.

Now that you're on the hunt

  • Bring along your must-have list and check off what fits on each visit. Similarly, take note of any concerns that may crop up.
  • Use your smartphone to take pictures of each property you visit. Photos can help you recall important details when it's time to compare properties and make your decision. For example, the Homeownership tool found through the BMO Marketplace App, available on iPhone and Android smartphones, allows homebuyers to store and track information on properties and access expert advice on-the-go.
  • Keep in mind your completion costs, even in a new home, for items such as landscaping or a deck. Work with your banker to verify if some of these costs can be incorporated into your mortgage.
  • Confirm property taxes and the estimated cost of utilities. This information can be obtained by your realtor.

Now you've found 'The One'

  • Obtain a home inspection in order to avoid any costly surprises.
  • Bring your offer to purchase to your banker. Have your documentation ready, including income statements and down payment amount, to get you a quick turnaround on approval.
  • Review your insurance options for both mortgage and home insurance.

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