Owning a house is one of the major achievements in an individual's life. Buying a house is a complex process that requires a huge amount of money. Most individuals spend their entire savings and take home loan to buy a house. Most lending institutions (banks) finance up to 80% of the total value of the property after scrutinizing various factors. The banks will look into the location of the property, builder's history, overall time taken to complete the project, etc. in order to calculate the eligible loan amount. Considering the fact that not most individuals have the sufficient money saved to buy a house, banks play a major role in making your dream come true.
When the bank carries out a check and qualifies certain properties for pre-approved loans, the borrower is required to submit few basic document to determine whether a loan can be provided.
When it comes to a pre-approved loan,
Based on the source of income and location, applicants are expected to submit different kinds of documents. Another crucial aspect here is, the bank will look into the borrower's credit report and score to determine whether a loan can be provided to an applicant or not. The credit score is a vital three-digit information that represents the credit management skills of an individual.
Once the banks approve an applicant's request for a pre-approved home loan, the applicant will be required to choose and finalized one of the listed properties within a period of six months. The rest of the process for the application is similar to a normal home loan application. There are many advantages of a pre-approved loan. Following are few of the interest features that makes pre-approved home loan popular:
Fast: Unlike the normal home loan, the application for a pre-approved home loan is faster and simpler. Taking into account that the lender has verified the property already, the borrower doesn't have to wait to find out whether a home loan can be given or not, especially for property-related concerns that tend to show up at a later stage. Also, the time required for the application process is reduced by more than half due to inspection by the lender itself. In the case of a pre-approved loan, the bank doesn't have to perform a property check which is necessary for a normal home loan.
Budget: When applying for a normal home loan, the applicants go through hundred of properties, choose the most liked property, carry out the paperwork, and end up with a rejected application. This happens mainly because the applicants have no knowledge about their loan worthiness. For e.g., the applicants applying for a home loan worth Rs.70 lakhs while he/she is only eligible for Rs.40 lakh is bound to end up in a rejected application. A pre-approved loan helps the applicants know their loan worthiness even before choosing the property. When the applicants know about his/her loan worthiness, it helps in narrowing down property options. A pre-approved loan lets the borrower buy a house within the budget and saves time that could have been wasted on the inspection of a property that was out of the budget.
Negotiations: Considering the fact that you already have the pre-approved loan sanction from a bank, a builder or developer will be more interested in selling that property to you compared to someone who is still in the paperwork process. This will give you an upper hand while negotiating the property price.
The application process for a pre-approved loan is similar to the application process for a normal home loan. Few of the documents that you will need for the application process are:
A pre-approved home loan is a better way of taking a home loan than getting last minute shockers through application rejections. The pre-approved home loans educate the borrowers to be financially sound. If you are planning to apply for a home loan soon, you should also consider reviewing your credit score to determine the chances of loan approval. Most lending institutions depend on the credit score to approve or reject a loan. There are many credit bureaus who receive credit related information from various government and non-government establishments. A periodical review of your credit report will help you understand the factors that are responsible for improving as well as damaging your credit score. Moreover, if there are any incorrect details on your Credit Information Report (CIR), you can report it to the concerned authorities in order to get it removed. There are many methods that you can follow to improve your credit score. A good credit score will increase your chances of getting a home loan application approved from most lenders.
Though a pre-approved home loan has its own advantages and disadvantages, it is still one of the best ways to buy a home. A pre-approved home loan is considered to be a financially organized method of buying a home through a loan. Most banks offer an extensive list of pre-approved properties in various parts of the nations. You can either download the list from the bank's website or choose to visit the branch to get your concerns answered immediately.
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