Before a borrower may even start the process of finalising a property acquisition, the borrower can choose from pre-approved house loan offers, which are home financing options that have been sanctioned in principle. The procedure is much like getting a traditional loan approved, except you can get the offer before choosing a property. The typical house buyer uses a mortgage loan to finance the down payment and closing costs. If you have a good credit score, you may be able to get a loan here with minimal hassle. Getting pre-approved for a home loan is generally a good idea before going house hunting.
Consider These Factors Before Deciding On A Pre-Approved Loan:
- After you apply for a pre-approval mortgage loan, the lender will check your credit. Avoid using many financial institutions at once since this may result in multiple credit inquiries being made simultaneously, which may be seen unfavourably by the bank and harm your score.
- A pre-approval for a mortgage loan has a limited time frame in which you can use it. In most cases, the duration is one month.
- Even if you meet the requirements for a pre-approval on a house loan, your application could still be denied if the bank or lending institution has issues with the property’s legal or technical characteristics or any other factors identified after the application has been submitted.
- Since the pre-approval and disbursement processes depend on the property you are purchasing in terms of whether it is an authorised property, customers may not be able to take advantage of the lower interest rates if there is a change in the shortlisted property during the process.
Let’s discuss the benefits of pre-approved home loans.
Improved Efficiency In Processing And Disbursing
Loan offers that have already been pre-approved move quickly through the sanctioning and disbursement process. Why? In a pre-approval process, the lender is confident that you meet all requirements for receiving a loan and can afford the payments. During the time of loan disbursement, the lender is responsible for doing nothing more than verifying the finalised property paperwork and other formalities. Such rapid processing is useful for real estate deals with limited time for closing.
Improved Negotiating Position
You can negotiate a better price with the builder if you have a financing offer in hand before you start shopping. How? The builder or seller of the house will take you more seriously as a buyer if you have already obtained a sizable down payment. The same is true if a bank has already approved your application for a home loan. Your ability to negotiate favourable interest rates and repayment terms for a house loan is enhanced by a low debt-to-income ratio and a high CIBIL score.
Easier House Hunting
Villas, apartments, bungalows, flats, etc., are all available on the housing market. If you can secure a loan before you shop, you’ll know exactly how much money you must spend. This way, you’ll be able to zero in on affordable housing options. If you have access to INR 70 Lakh, you can browse homes priced between INR 65 and 75 Lakh. You will save much time and energy by swiftly ignoring agreements that are not allowed.
Financial Planning Improved
You might get a clearer picture of your financial status after getting pre-approved for a house loan. You can use a home loan calculator to check how much you can borrow and how much you need. Loan EMI calculators allow borrowers to estimate their monthly payments and total interest paid.
Concluding Remarks
While there are advantages to having a mortgage pre-approval in hand, it is crucial to remember that this is in no way a guarantee that the loan will be funded. Lenders look at the property, the bank’s standards, and other paperwork concerning the loan before making a final decision. Therefore, it is crucial to maintain good credit practices and make all payments on time, even if you have a pre-approved housing loan, to increase the likelihood that the loan will be accepted. Remember that getting pre-approved for a mortgage is only advantageous if you are genuinely committed to buying a home. Your credit score may strike if you apply for a pre-approval mortgage loan from more than one lender. If you want to avoid this, it’s smart to consult an expert through home loan customer care number.
