Get the best deal for your loan
Pre-approved home loans put buyers at an advantage as they can negotiate good deals for themselves SOME FACTS AT A GLANCE
Homebuyers, especially first-time buyers, like to be in a position of advantage to make their purchase once they have identified a property they like. The most challenging aspect of home ownership is invariably financing. Buyers have to consider the lending institution for getting the loan, the type of loan to be applied for, the amount of loan to be availed, time taken for approval etc. Getting pre-approval for a loan then is the best option. Doing so means that this tricky and time- consuming aspect of home purchase has already been dealt with, and that one can enter the market focused squarely on the best options. Getting pre-approved loans also puts you in the strongest possible position when it comes to negotiating the best deal.
What i s t he dif f erence between loan pre-qualification and pre-approval?
Pre-qualification for a home loan is more or less like an educated estimate provided by the lending company. They will be letting you know the type of loan you could qualify for, and the maximum amount. The estimate is usually based on your financial history, loan eligibility and buying power. A pre-approval, on the other hand, is a written confirmation by the lender.
Before handing over the pre-approval certificate, loan officers will completely access your employment and remuneration information and do a complete ‘credit-worthiness’ check. This involves collecting all the data related to your past and current debts, repayment history, disposable income, credit card records, etc. and running it through software that will calculate whether When you opt for a pre-approved home loan, challenges such as choosing a lending institution, nature and quantity of loan and repayment terms and period are already dealt with While seeking pre-approval for a home loan it is always best to approach a lending company that you know or can be referred to by a friend, colleague or family member. However, do not end your search with the first lender
you qualify for approval.
How does one secure a preapproved home loan? It is always best to approach a lending company that you know or can be referred to by a friend, colleague or family member. The lender needs to have the assurance that you are a credible borrower. However, do not stop searching after you have met the first possible lender.
Ask around and look for the lending institutions that provide the most competitive interest rates and are known for their helpful customer service. Once you have contacted a lender, the loan officer from the identified lending institute will then pay you a visit and help you streamline your financial statements and see that you are prepared to discuss your bank statements, investments, holdings, salary slips, income tax returns and other information related to your finances. This basically starts the process which will end with you becoming a pre-approved borrower.
What good will a letter of pre-approval do?
Firstly, a pre-approval letter lets you know the exact budget range for househunting. This helps you stay in sync with your financial reality and keeps you from allowing your focus to stray to properties that you cannot afford.
S e c o n d l y, h a v i n g a pre-approval letter means that you can grab an offer immediately when it comes across and is in your budget range.
The letter states that the finances are ready when you choose to ask for them. It is important also to note that you should work with lenders who have the ability to provide customised pre-approval letters, inclusive of the maximum purchase price.
Sellers could get greedy if they see a greater loan amount than their quote.
Getting pre-approvals for a home loan is a crucial step that can put you in the best possible position in the home buying process. It will give you both peace of mind and give you the freedom to look for what you want and what you should avoid in terms of affordability.