Pre Approved Home Loan

 

 

A pre-approved home loan signals an instant approval for borrowers who are keen to purchase a property, which may or may not have been identified by them. This eliminates the need to go through lengthy application and documentation procedures. However, from the lender’s perspective, a pre-approved home loan requires a thorough examination of the borrowers’ credit worthiness in order to determine the approval amount.[br]

 

A lender often takes into consideration several factors for granting a pre-approved home loan, such as:

• Income

• Asset pool

• Age

• Savings history

• Open lines of credit

Pre Approved Home Loan: Important Considerations

A loan approval is valid for a specific period like six months, depending on the bank. This validity-period buys time for a borrower to hunt for a suitable property, fitting the pre-approved loan amount.

 

While approaching a lender, within the validity-period, one may be asked to furnish a copy of the latest salary slip for reconfirmation of eligibility.  

 

If one fails to find an appropriate house within the permitted validity period, s/he can apply for a renewal of the pre-approval. A borrower may obtain the same terms under the new approval, provided the market interest rate has not gone up significantly since the lapse. Nonetheless, some banks may continue with the terms of the prior pre-approved home loan agreement.  

Benefits of a Pre Approved Home Loan

Pre-approved home loans are offered to a select few. Therefore, if an individual is planning on purchasing a property, rejecting a pre approved loan would be imprudent.[br]

 

Some important benefits of a pre approved home loan are:

 

• A pre-approved home loan establishes a better relationship between the lender and the borrower.

• A pre-approval informs the borrower about the maximum amount available, helping to narrow down the home search and avoid disappointment.

• Such loans help to get a fair idea of the monthly payment obligations.

• Pre-approved loans create greater credibility and they help to negotiate with real estate agents for better terms.

• Pre-approved home loans accompany lock-in interest rates, which protects against rates increases while shopping for a home.

 

Most importantly, the processing time of a pre approved home loan helps applicants to avoid missing an opportunity to purchase their dream house.