When you’re shopping for a property, you may be tempted to look at property listings right away. However, before jumping head first into shopping for your new property, it is advisable to seek assistance from a mortgage broker to have your loan pre-approved beforehand.
Here are some of the reasons why:
1. It helps you understand what you can afford.
Probably one of the most frustrating things you’ll experience when shopping for a property is finding one that you really like, but finding out later on that you can’t actually afford it. It can be heartbreaking and it can also be a total waste of your time. However, with a pre-approved home loan, you’ll know exactly how much you can afford. This helps prevent feeling disappointed and saves you a lot of time. The reason is that you will be able to narrow down your options early on based on your price range.
2. Pre-approval allows you to act faster.
Finding the right property can be tough, especially when there is more than one of you to impress. So, when you find the right home, the last thing you want is to miss out because your finance took too long. Pre-approved loans allow you to speed up the process of purchasing your home, as you will be able to make an offer on a property faster, which prevents your dream home from falling into the hands of a different buyer.
3. It makes negotiating easier.
When you know how much you can afford, you’ll be able to approach sellers with more confidence. With a pre-approved loan, the seller or their representative will see you as a serious buyer. Not only will this help speed up with the selling process, but also make it easier for you to negotiate the terms and cost of the property. For example, if you’re asking the seller to lower the price on the property, they’ll be more likely to do so if they know how much you’ll be able to pay and that you’re serious in buying it as soon as possible.
4. Pre-approval provides you with peace of mind.
With a pre-approved loan, it means that a huge bulk of your application process has already been dealt it and because of that, you’ll have less to worry about afterwards, which makes the settlement process faster and more convenient on your end.
What Do I Need To Know About Loan Pre-Approval?
Now that you know the benefits of having your loan pre-approved, it’s also important to get as much information as you can.
For one, some lenders might provide only pre-approval based on information submitted online through their fancy software. This means that a “human credit assessor” has not actually picked up your application to check over all your documents. This means when you go to finalise the pre-approval they can still turn down your home loan application because of something they found after they look through all of your supporting documents. By going to a lender that will assess a pre-approval correctly, this will save you the hassle of getting more items for the bank once you have found the property you like.
Another important point you should remember is that home loan pre-approvals expire after a certain period, usually after 3 months. If you’re having a difficult time looking for a property to buy, then you may have to re-apply for the loan. During this process, the lender will likely review your financial situation to ensure that you can still afford the loan for which you have been pre-approved. Depending on what your current financial position is like will depend on whether any changes to your employment or savings held will impact the pre-approval.
Will Using a Mortgage Broker Help Me Get Pre-Approval?
If you’re looking to get your loan application pre-approved or to increase your chances of pre-approval, it helps to use a mortgage broker. There are several reasons for this.
First, a mortgage broker will determine what your financial and personal circumstances are and base their loan recommendations on those factors. You are more likely to receive loan approval if a broker finds the right loan structure for you. Mortgage Brokers have experience with lenders and they can usually judge who will get approval and who won’t and advise you in light of this.
Mortgage Brokers know what lenders require from loan applicants when it comes to the documents they have to submit. The broker can advise you on this, which again helps make you more likely to be pre-approved and at the same time speed up the entire process. They can even do the application and follow it up on your behalf for an added level of convenience. This saves you much needed time and stress as they take care of the paperwork for you.
It is important to keep in mind that not all brokers can demonstrate their knowledge and experience in handling loan applications and looking for suitable loans, so it is important to find the right broker for you. Our team of brokers at Launch Finance have a combined 70+ years of experience and can assist you in seeking pre-approval for your home.
Contact me today about how I can assist you in receiving pre-approval for your home loan.
Written by Duncan Pearce.