When buying a home there's so much to consider, so important details can be forgotten in the mad rush. One of those important details might be knowing exactly how much you can afford to pay for a home, and how much you can borrow.
This is where loan pre-approval comes in handy. You've got to walk before you can run. And in the case of a home loan, you've got to get pre-approval before you can buy.
What is loan pre-approval?
Loan pre-approval generally comes in the form of a letter from your bank or chosen lender, indicating the amount that you can borrow to buy a home.
At this stage your loan is not confirmed and the amount could change, so it's best to use it only as an roughly indicative figure of the price range in which you can buy.
Why do I need it?
Getting your loan pre-approved is useful for several reasons – first of all, it sets out the amount that you can borrow from your lender. This is incredibly handy when searching for property as you'll have a clear indication of the amount that you can spend, and the type property that you can afford.
If you don't get pre-approval real estate agents may spend less time helping you.
This will make the buying process considerably easier, as you'll avoid the disappointment of choosing a home outside your budget, and you'll also narrow the field before you even begin looking. This will allow you to bid with confidence at auctions, and search for a home knowing that you can afford what you're viewing.
Additionally, if you don't get pre-approval real estate agents may spend less time helping you find the perfect property, as they might doubt your ability to come through with the finances.
How can I get it?
If all your ducks are in a row getting pre-approval shouldn't be too difficult, but you'll need to provide the following at minimum:
- Proof of deposit.
- Proof of income.
- Monthly expenses and other outgoings such as loans, credit cards and store cards.
If you're about to start searching for a home, and you're not quite sure how to apply for pre approval then let the expert team at Advantage Finance lend a helping hand. We've got years of experience negotiating with banks, and can help make pre-approval and the entire loan process, a stress-free breeze.
Get in touch today!