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

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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.

THINKSTOCK

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