All About Pre-approved Home Loans

Sujan Afi S

Introduction

Owning a dream house is not so easy because it requires a handsome amount of money. Sometimes we get disheartened because of the shortage of money. Does that mean

that you can’t desire your dream house? No, it’s not the case! If you are going to buy your dream house or want to invest in real estate and have no idea of the total amount of money you might require, then you may go for a pre-approved home loan.

Applying for a home loan after selecting the property is not helpful for proper planning because there is a risk of uncertainty in approving the required amount of home loan. Besides, the process of approving the loan might take too much time. The property deal might fail and you might be forced to leave your dream property. Therefore, you should go for a pre-approved home loan while looking for buying your dream house or invest in a real estate property.

What is a pre-approved loan?

A pre-approved home loan simply refers to that kind of home loan where the borrower applies for credit based on his financial background and financial record, such as present income, creditworthiness, type of job, financial position, previous loan history, etc. before finalising the property deal.  

Advantages of pre-approved loan

There are several advantages of a pre-approved home loan, such as –

  1. Effective search of property: If you ensure your financial condition before starting to search the property then you can make an effective search of property without draining your time and effort. You can easily go for the suitable properties which are under your budget!
  1. Better negotiation capacity: If you have a pre-approved loan offer then it will surely increase your bargaining power with the seller of property or developer. The property dealer might give you more importance and consider you as a potential buyer. This, in turn, will place you in a better position in the property dealing process and even the dealer might offer an attractive discount to you just by noticing your pre-approved loan offer.
  1. Quick processing of the loan: A pre-approved home loan always ensures you a faster and simpler way of approving the loan than a regular home loan or other kinds of regular loans. This makes the entire loan approval process very quick.
  2. Better financial planning: A pre-approved home loan will make you aware of your total finical condition. You can effectively plan your next financial movement like down payment, savings, etc. accordingly. 

Process of getting a pre-approved home loan

It is very important to know the process of getting a pre-approved home loan before applying for it. We have discussed it below in detail:

  1. The first step is writing an application to the bank or other financial institution for a pre-approved loan. Along with this application, you also need to provide the required documents like your income certificate, credit history, current residence, marital status, employment details, etc.
  1. In the next step the bank will verify the documents and judge your loan repayment capacity. The bank will also verify your credit score.
  1. After the stage of verification, the bank will issue a sanction letter of the home loan and also mention the loan interest rate in the letter. This sanction letter is valid for a specific time. After that, the loan amount and interest rate may change.
  1. The bank will charge a non-refundable processing fee which might be adjustable during the time of actual approval of the loan.
  1. In the final stage for approving the loan you just need to identify your suitable property before the date of the experiment of the sanction letter of pre-approved home loan. The loan will be disbursed after the submission of the required property documents to the bank and after proper verification of the property is done.

Conclusion

Although a pre-approved home loan is a good option to buy a property you should go for applying for a pre-approved home loan when you are very sure that you are going to buy a property. Else you will be charged for unnecessary processing fees and beyond. Besides, you also waste your time and effort. It is also advisable that you should make an application after doing proper research on your credit score because rejection from the bank side will adversely affect your credit score.

Alright! I hope I have been able to provide you with a general idea of the pre-approved home loan and its advantages. Nevertheless, it is good to discuss with an expert too before you go for such kind of a loan. Roodland India can help you in this regard.

Drop a mail at info@roodland.com if you have any queries regarding the topic discussed. Feel free to mention other concerns too. Our experts will guide you in the best manner and come up with promising solutions to all your problems! 

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