A pre-approval letter from a lender indicates that they are willing to approve your loan once you have found the right property depending upon your budget. A pre-approval isn’t always evaluated by the bank or the lender’s credit department. In other words, a pre-approval means that the financial institution will approve a certain amount of money if you find a suitable house and your financial status and income do not change or deteriorate. This enables you to look for good properties with shorter financing terms. In the pre-approval home loan, a lender will provide an estimated value they can lend to the borrower.
Pre-approval may not be necessary but it helps buyers to know the value that they can mortgage from a financial institution. This way they can plan and strategize accordingly. However, buyers also need to know that even if they get a pre-approval done, they will still have to pass the final approval procedure. The final approval has got nothing to do with the pre-approval process. This means the borrowers will have to provide all documents and proof again for final approval of the loan.
If you’re a first home buyer Sydney and looking for a home loan, you can always check with Sydney Brokers. They are not any financial institution that provides mortgages, but they help borrowers to find an appropriate lender with a decent rate of interest and mortgage amount. Khash the Mortgage and Finance Broker in Sydney brokers provides extraordinary service and best solutions to his clients based on their requirement and budget.
Why Get Pre-approval?
- Getting pre-approval before you start looking for properties will help you narrow your search and look for homes and condos that you can afford in the long run.
- For starters, having a preapproval gives you the chance to budget and completely understand what your loan repayment will look like and understand the ongoing commitments.
- Knowing your budget suggests that you won’t waste time chasing properties that are outside your worth.
- A formal pre-approval can put you in a better position in a competitive market. If the sellers have to choose between two buyers, they’ll go with the one that has already received a pre-approval letter because pre-approvals assure that the customer is financially capable of purchasing a home.
- Getting pre-approved may put you in a better position when it comes to negotiating the price. If the owner is eager to sell and needs assurance that the transaction will go through, they will be more than happy to allow a lower offer from anyone who is financially able of buying their home.
- Getting pre-approved ahead of time can speed up the application process. If the purchase deadline is less, or if the property is being sold under Auction terms, then this time-saving criteria could be important.
When it comes to evaluating a pre-approved consumer loan, not all banks are created equal. Since your job situation may change throughout the year, most lenders only provide pre-approval for 3 to 6 months. Hence, if you’re planning to buy within the next 3 months, it’s a good idea to get pre-approved.