2 Sep

Did your bank give you a rate hold or an actual pre-approval?


Posted by: Trent Glover

Securing a rate hold is like having   insurance on your mortgage rate – you no longer have to worry about mortgage   rates increasing while you find your new home over the next 90-120 days. And   if rates drop within that same period, so too will your pre-approved rate.

For instance, if you obtain a 3.75%   rate hold and then global risks subside and the economy strongly recovers   over the next three to four months, that 3.75% could easily jump to 4.50% or   higher. In this case, your rate hold for 3.75% would have saved you   three-quarters of a percentage point, which would translate to a savings of a   significant amount of money over the term of your mortgage.

But a rate hold means nothing if you   don’t meet the lender’s qualifications. By working with me to obtain a pre-approval   and a rate hold, you can be confident you have access to mortgage financing   and you will know how much you can spend before you head out shopping for a   property.

It’s important to note, however, that   there is a significant difference between being pre-


approved and pre-qualified.   In order to obtain a pre-approval, the lender fully underwrites the deal,   whereas with a pre-qualification only the most basic details are considered.   Remember that many   banks will only issue a pre-qualification.

There are several reasons why you may   want to secure a rate hold, including when you:

  •   Are thinking of buying a home in the   next four months
  •   Are considering locking in your   variable rate to a five-year fixed if rates rise, but your lender won’t hold   a good rate for you
  •   Are casually thinking of refinancing   but prefer to wait for fixed rates to rise so that your interest rate   differential (IRD) penalty falls
  •   You want to hold a rate on a   different term than you were pre-approved for by a different lender

As always, if you have any questions   about rate holds, pre-approvals or your mortgage in general, I’m here to   help!