Do I Need A Financing Condition If I’m Pre-Approved?

In a seller’s market the buyer strategy often is to write an offer that’s lean on conditions.  If you’re a buyer and pre-approved for a mortgage, that means you don’t really need a financing condition, right? Wrong!

A pre-approval does not guarantee that you will get the mortgage loan. Once you have a specific home in mind, the lender will want to verify that the home or property meets certain standards (such as the condition or market value of the home)  and have an appraisal performed before approving your loan.

If you’re buying a condominium, some lenders will also want to review the condo documents such as the financial statements.

In the case of a high-ratio mortgage (less than 20% down) the insurer whether it be CMHC, Genworth or Canada Guaranty will need to give their OK as well.

The lender could decide to refuse your mortgage application even though you had a pre-approval for a certain amount.  No matter how competitive the market is, having a subject to financing clause is essential even if you’re already pre-approved.

One response to “Do I Need A Financing Condition If I’m Pre-Approved?

  1. Very sound advice, it makes me cringe when I see an offer without conditions and we are starting to see them now we are in a strong sellers market.

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