“Putting your full faith in a mortgage pre-approval is like betting on a heavy favorite in a horse race. You’ll probably win but there’s room for major disappointment.

Sure, pre-approvals have benefits.

  • The best ones accurately measure your qualifications and how much house you can afford.
  • Their 90- to 120-day rate guarantees protect you if rates rocket up while you’re home hunting.
  • They make you seem more serious to sellers and real estate agents. (In competitive bidding situations, they’re almost mandatory.)
  • They’re free and there’s no obligation to use the lender that pre-approved you.

But here’s the problem: pre-approvals are not full approvals. So if you’re going to rely on one, you need to understand their limitations.”

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Reports: Robert Mclister of the Globe and Mail