Pre approved Home Loans, Why you should take Pre approved Loans ?

The seller can ask to see that letter as soon as the date has passed, so beware of anyone who tries to put an early commitment date into your contract. What Are Closing Costs? The Bottom Line Go through the pre-approval process with several lenders to shop interest rates and find the best deal. Before you buy a home, pay down as much debt as possible. When you have a clear picture of your finances — both how much you can borrow from banks and generate from your own sources — you will know exactly what your budget for buying the house should be. Most lenders must know precisely where your down payment comes from to ensure that it's not borrowed. Want To Learn More?

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A mortgage pre-approval is a written statement from a lender that signifies a home-buyers qualification for a specific home loan. Income, credit score, and debt are just some of the factors that go into the pre-approval › Home › Purchasing Your New Home › How To Get A Mortgage.  · When getting pre-approved for a loan, having the right lender can make a big difference. Many home shoppers get pre-approved by a lender based on a recommendation from a friend or real estate agent, and don’t bother shopping  · Before you can get serious about buying a home, you need to get pre-approval for a mortgage. Learn what you need to speed up the approval

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The Bottom Line

A prequalification gives you an estimate of how much you can borrow based on your income, employment, credit and bank account information.

Please review its terms, privacy and security policies to see how they apply to you. Skip to main content Please update your browser. Begin Site Message Content. Interest rate video Opens Overlay. Learn the difference between the annual percentage rate APR and the interest rate. What can you afford? How much home can you afford? Take the first step and get prequalified.

Call a Home Lending Advisor. Start online for a mortgage from Chase. Ask yourself these questions to weigh your mortgage lender and loan options: Do you currently have a relationship with the lender?

What level of service does the lender provide? How easy will it be to access your accounts, pay your bills and get help? Needless to say your finances would go for a toss and you may have to reconsider your buying decision altogether. The biggest advantage of a pre-approved home loan is that it gives the borrower a clear idea of how much he can borrow from a bank. Based on financial statements and credit record of the borrower, banks offer pre-approved loans. Unlike standard home loans, banks do not evaluate both financial documents as well as property papers at the time of pre-approval.

Only financial documents are evaluated at this stage which makes the processing much faster. Thus the processing time involved at the time of disbursal too would reduce. When you have a clear picture of your finances — both how much you can borrow from banks and generate from your own sources — you will know exactly what your budget for buying the house should be.

You need not spend time in looking at property which may be good but completely out of your reach. Edge over other buyers. You can negotiate better and make faster payment as compared to other buyers. Discounted rates on pre-approved loan.

Many a time, banks offer a discount on the rate of interest applicable for pre-approved loans. Although not significant, these discounts are genuine.

Considering that ticket size of most home loans is usually large, even a small discount can save the interest cost considerably. Pre-approval is just a formal offer of a loan made by a bank. Being pre-approved does not mean guaranteed disbursal of the loan.

The period within which a borrower is required to avail of a pre-approved loan varies from bank to bank. It can range anywhere between 2 to 6 months. This often compels buyers to take decisions fast even though it may not be the best one. Changes in interest rate. Any change of interest rate thereafter during the tenor of pre-approval will impact the final loan amount.

Thus the amount disbursed may actually be different from the sanctioned loan amount because of adverse impact of interest rate changes. Arranging finances for buying a house can be challenging to say the least. Pre-approved loans can be really handy under such circumstances to ensure that your calculations do not go wrong. It basically introduces an element of certainty which a home buyer can rely upon.

However, validity period of the pre-approved loan is something which can impact the borrower in more ways than one. It may compel people to buy property even though it may not be their ideal choice. Often selecting a home may take much longer than days. This would mean forfeiting the processing fee paid and repeating the whole process once again to avail of a loan subsequently. To conclude, taking into consideration the pros and cons of this facility, home buyers should do a few things before applying for a pre-approved loan.