How to Get a Pre-Approved Home Loan
What is Pre-Approval?
Whenever people think of buying the house of their dreams, the only thought that crosses their mind is to get a Home Loan. Various private and public sector banks have started the trend of providing Home Loans. This has been a great boon for many people.
This process of getting an approval from the bank can be a tedious process. Many a times, it so happens that people lose their desired property due to the long waiting time demanded by the bank for processing a loan request.
Thus, this trend of getting a pre-approved Home Loans even before the acceptance of your request has been initiated. Banks would provide pre-approval to you after considering your background. The yearly income of the customer and other major factors are considered before giving a pre-approval. This pre-approval can be shown to the dealer to book the house that the customer desires. Thus the property can be booked even before the actual Home Loan is granted.
Although, getting a pre-approval for the Home Loan does not mean that the actual Home Loan has been granted. It should be kept in mind that a pre-approval is offered for a particular amount only. The bank has all the rights to declare the pre-approval void if the customer books a house of higher price value that the requested amount. Many times people misuse these pre-approvals to book properties of higher price value. Thus, make sure that after getting a pre-approval for a Home Loan, the property is booked within the allowed price only. Read this blog post to know How to invest in real estate.
Getting Prequalified for a Home Loan can be Quite a Challenging Task
Pre-qualification before the application of Home Loan should be thoroughly done. Pre-qualification means estimation of your affordable expenditure on the house.
The bank checks your assets and credit before even offering you the preapproval. People should keep a check on their requested loan amount.
People who do not have any prior investments in properties must make sure that their work and asset value complement their loan request. Make sure that your income receipts and asset documents are kept ready as bank officials will do a strong background check even before considering your request for pre-approval.
We should have the following points in mind while applying for a pre-approved Home Loan:
Verbal words and promises don’t hold any importance. So while, applying for any Home Loan it is advised to keep the income statements ready. It’s always better to maintain a proof of all the updated income and bonuses.
Before accepting the request for the loan, the bank needs a proof of all the assets. The bank needs to check if the customer can pay regular down payment hence, they enquire for the proofs. Usually the down payment is fixed to 3.5% while some Home Loans may require 20% down payment.
Credit scores determine the interest rates for the down payment. If a customer has a credit score above 750 then the down payment can be lowered to a substantial amount. Customers with low credit scores require higher down payment. Many times, customers are offered discounts in their down payment amounts if certain an amount is paid.Read this blog post to know How much credit score is needed to apply for a Home Loan
Verification of Employment Verification:
Background checks are a method of verifying the authenticity of the customer. The customers, in their application provide certain contact details that are further verified by the bank. Usually customers are asked to mention the contact details of their employers. If the customer has shifted their job recently, then the contact details of past and the present employer is required. Businessmen are asked to provide some extra paperwork.
Proper Documentation :
The procedure for Home Loan application requires thorough and efficient documentation procedures. Usually government documents such as, driver’s license, PAN card etc. are required during the Home Loan documentation procedure. The application procedure of a house loan may become very lengthy and tedious sometimes.
All the above described points, hold utmost priority while applying for a pre-approved loan.
Benefits of Pre-Approved Home Loans
Zero-In On Your Home :
Lenders usually specify the loan amount when they offer pre-approved Home Loans in India. Since you know the exact amount, you can eliminate homes that are not within your budget, and narrow down on the most optimum choices.
You Can Negotiate with Your Seller :
A pre-approved Home Loan will make it clear to your seller that you mean business, and that you have the funds to close the deal. This could lead to your seller providing you with added benefits like discounts, or allowing you to move into your new home as soon as possible.
It’s Comforting to Your Real Estate Agent :
If you buy a home through a real estate agent, he/she will be more proactive and put in their best efforts. Getting a pre-approved loan means that your agent knows how sure you are of buying a home, and that way he/she is certain of the commission they will receive.
You’ll Get It Quickly :
Receiving a pre-approved loan means quicker loan processing. You won’t have to go through every aspect of the documentation process that is involved in getting a Home Loan. Usually, pre-approved loans take roughly one-third of the time taken by regular Home Loans. Another benefit is that you can quickly purchase the home you’ve chosen to buy, before it’s sold to another buyer.