Pre Approval Home Loan

 

 

A pre approval home loan is an excellent resource for understanding your financial capacity and narrowing down the property options accordingly. Remember, biting off more than you can chew can lead to detrimental outcomes. Pre approval loans are usually offered by banks and financial institutions to individuals with fairly decent credit ratings. Such a loan may be consented even before an individual has finalized the property for purchasing.[br]

 

Pre-Approval Home Loan: Types of Services

A pre-assessment of finances helps in saving valuable time, while home loan shopping and house hunting. Home loan pre-approval and pre-qualification, which are often wrongly used interchangeably, are important assessment services offered by various banks. A home loan pre approval and pre qualification though similar in fundamentals, differ in scope and applications.  

 

Home Loan Pre Approval

This is a formal procedure, wherein a lender inquires to borrowers about their finances and verifies the accuracy of the information. Pre approval home loan verification is carried out by reviewing relevant documentation and conducting background checks. Once a home loan is pre-approved, the lender is obligated to provide the loan amount.

 

Other important benefits of a home loan pre approval are:

• It enables a borrower to keep track of the borrowing capacity.

• It remains valid for some duration, typically for six months.

• It is a concluding verdict, which helps to negotiate more effectively with real estate agents more.

• Pre approved home loan buyers qualify for multiple offers.

 

However, due to the lengthy verification process, a pre approval home loan takes more time.

 

Home Loan Pre Qualification

 

Obtaining a pre qualification is comparatively easier, as it involves a casual and brief conversation with a bank or lender. In a pre qualification meeting, borrowers are required to furnish complete information with respect to their finances, such as income, assets and monthly expenditure.[br]

 

A lender establishes a borrower’s payment capacity by reviewing and computing this information, assuming all disclosed information to be true and accurate.

 

A ‘pre-qualification’ certificate does not bind a lender to underwrite a loan. Separate qualification procedures and verifications are carried out by a lender when an individual applies for a loan even with a pre-qualification certificate. Such a certification is only used for obtaining a rough estimate of the borrowing capacity.

 

Using a pre-qualification, followed by a home loan, pre approval is the best way to shop for a home loan.