There is a common but important fact that saving money for buying a home requires time, which is absolutely right. It is always recommended that you start your savings early so that later you have the necessary funds for buying a home. There are a couple of ways to generate funds like asking friends and family, selling your assets, liquidating your investments, taking a home loan, etc. The most obvious choice is, of course, taking a home loan.
The banks or any lending institution check your records before approving the home loan application. The checklist includes the credit score, age factor, a reliable source of income, any outstanding loans, history of loan repayment if any and so on. Failing in any of these factors can impact your loan approval process by either delaying the application or rejecting it entirely. Now assuming that you have all your records clear then the application will be passed for approval.
There are times when you may get good deals on a property that fits your needs as well as your budget. As there are many home loan applications and approving them may take more time than anticipated, you may lose on that deal you found by the time your application is approved. In order to save you from the disappointment of losing a good deal, there is an option of choosing a pre-approved home loan for quick processing.
Generally, pre-approved loans are taken prior to property selection. Some lenders also provide the facility to get an instant e-approval by allowing you to make an online application for the home loan. The condition for a pre-approved loan is that within the validity period, which is usually six months from the date of application, you must identify the desired property. Failing to do so, the application will be reevaluated further delaying your application.
The main advantage of choosing a pre-approved loan is that you can have a clear picture of your future financial situation. By having a set budget in mind, you can search for affordable properties instead of thinking about the ways to arrange funds. With a pre-planned budget in hand, you now have a strong negotiating point. The developers may give your purchase a priority among the other buyers and may also land on some better deals and discounts due to the fact that you have the ability to make the payment faster.
Usually, the pre-approved loan has a faster processing time. At the pre-approval stage, only the income proof will be evaluated and at the time of the disbursement, the property documents will be evaluated. So the lender finishes the appraisal in advance expediting the process altogether starting from the loan approval to disbursement. Quick processing of the loan facilitates the easy purchase of the property. You do not have to miss out on a good property deal or worry about an increase in prices.
While a pre-approved loan is a good option in most cases, it is preferable to make an application only when you are sure that you want to purchase a home. It’s also preferable to do a bit of research and then make an application with just one or two lenders. Multiple inquiries without approvals may have an adverse impact on your credit score, as the lenders may think that you are not serious about the loan.
