I was recently approached by a borrower who wanted to make an offer on a one million dollar home. I asked him if he was mortgage pre approved. He said no but felt he could handle the payments. After a brief conversation I calculated he would need 3 times his currently salary to be approved to purchase the property. The client was still hesitate at the thought of getting pre approved. He believed to have his credit bureau checked would damage his credit. Let us think about that one. You need to have a credit check to be approved for any type of loan so how will this damage your credit. (Random shopping for different types of credit will single red flags with Equifax and will impact your credit score but not for just one type of loan over a specific period).
I cannot stress the importance of a mortgage pre approval. Not only does it confirm the obvious which is the maximum amount you can borrower but by working with a experience mortgage adviser you can work through different scenarios such as cash flow payments, product options, Can I increase my borrower power by paying down some debts and reducing down payment, will I need add a co signer, shall I go short or long term depending on my time horizon in the property etc etc. There is allot more to a mortgage pre approval then the loan amount.
I would always suggest working with a experienced mortgage broker for your mortgage pre approval. Yes I am a little biased because I am a mortgage broker but I do believe they give you the best options. The general banks can be limited to what they can do. If the bank employee is experienced then yes maybe they will take the time to work through different scenarios but most of the time they enter the information you give them into a computer and spit out whatever numbers comes out. I cannot tell you the amount of times I have being able to increase a clients mortgage approval by 50K to a 100K by working through different ideas and options after they were pre approved by their bank.
Do yourself a favour and always get mortgage pre approved before you go house shopping and don’t just get one from the internet. Seek out a experienced mortgage broker and work with them. You don’t need 2 or 3 mortgage brokers if you trust the one you are with. Most of the time they have access to the same rates. It is the relationship and how they manage the overall process that will make them trustworthy.