Benefits of Pre-Approved Home Loan: Reasons and Steps to Consider

“As a valued customer, we’re pleased to let you know that you qualify for a pre-approved home loan.” You might have received a message or letter congratulating you on being eligible for a loan before even applying.

Table of Contents

• Why Get a Pre-Approved Home Loan?
• Benefits of the Pre-Approved Home Loans
• Steps to Secure a Pre-Approved House Loan
• Things to Keep in Mind for Bank Pre-Approval Home Loans

An instant home loan pre-approval is given to people with a good financial track record. In simple terms, it’s an offer for a home loan based on how trustworthy you are with money. When you meet certain conditions set by the bank, they can offer you this kind of loan. Even before they make the offer, the bank has already looked at your financial history.

Why Get a Pre-Approved Home Loan?

Pre-approved home loans offer a range of benefits that can significantly impact your home-buying journey. A mortgage pre approval serves as a powerful tool, providing you with insights and advantages that streamline the process of acquiring a new home.
But remember, pre-approval doesn’t mean you’re guaranteed to get the loan. It’s more like a sign that you could get one. To get a home loan, the bank goes through your financial history and checks the property you want to buy. While pre-approval doesn’t guarantee the final offer, it has its advantages.

Suggested read: Pre EMI vs Full EMI

Benefits of the Pre-Approved Home Loans

1. Easier Negotiation with the Lender

Since the bank has already approved your loan, you can talk to them with more confidence. Having a letter from the bank makes the process serious. Also, you might get a home loan interest rate reduction. This is because the bank is sure you can pay them back, so they’re more likely to consider you a serious buyer. Plus, you can choose how long you want to take to pay back the loan, making it easier on your wallet.

So, with a pre-sanction home loan, you’re not only getting money to buy a home but also getting better deals and more control over how you repay. It’s a way to make your home dreams more secure and easier to manage.

2. Faster and Simpler Loan Process

One of the benefits of pre-approved home loans is that loan processing becomes easy and fast. Since at the pre-approval stage, the lender has already verified the income documents of the borrower, the home loan process steps become easy and quick. The only process left before loan disbursal is the property document verification and other legalities. As soon as these documents are verified, the sanctioned loan amount is disbursed.

3. Help you avoid last-minute surprises

When you’re buying a home, there are a lot of things that can go wrong. One of the worst things that can happen is to have your loan application denied at the last minute. This can be a major setback, and it can delay or even derail your home-buying plans. Getting a bank pre approval home loan can help you avoid this problem by giving you a better idea of whether or not you’re likely to be approved for a loan.

4. Smart Financial Planning

When you’re looking for a home loan, things can get uncertain, and sometimes your applications might not get approved. Imagine someone wanting a big loan like Rs 1.2 crore, even though they can get Rs 80 lakh based on their credit history and income. This shows how important it is to know about your pre-approved loan eligibility. It’s like understanding what you can afford.

Suggested read: PMAY Eligibility Criteria

Steps to Secure a Pre-Approved House Loan

1. Gather Your Financial Documents: The first step to securing a pre-approved home loan is gathering the necessary financial documents. These typically include recent pay stubs, tax returns, bank statements, and proof of any other sources of income.

2. Research and Choose a Lender: Not all lenders are created equal, and finding the right one can make a substantial difference in your home loan experience. Research different lenders, and compare interest rates, fees, and customer reviews.

3. Submit a Pre-Approval Application: With your financial documents in hand and a lender selected, it’s time to submit a pre-approval application. This application involves providing detailed information about your financial situation.

4. Wait for the Pre-Approval Decision: After submitting your pre-approval application, the lender will review your information and make a decision. This process typically takes a few days. Once approved, you will receive a pre-approval letter outlining the loan amount, interest rate, and other terms.

5. Keep Your Finances Stable: It’s important to maintain financial stability throughout the pre-approval process and until the closing of the loan. Lenders might perform additional checks before the final approval, so avoid making significant changes to your financial situation, such as taking on new debt or changing jobs.

6. Utilize Your Pre-Approval Wisely: Armed with your pre-approval letter, you can confidently start your home search within your budget. Remember that a pre-approval is not a guarantee of a loan, but rather an indication of your eligibility. Be mindful to stay within the loan amount mentioned in the pre-approval letter, as doing so could lead to complications during the final approval process.

7. Await Final Approval and Close the Deal: After the lender completes its due diligence, it will issue the final loan approval. This is the green light to proceed with the closing process. During the closing, you’ll sign the necessary documents, pay any closing costs, and officially become a homeowner.

Suggested read: Top 10 banks for home loans in India

Things to Keep in Mind for Bank Pre-Approval Home Loans

Here are a few things to keep in mind when getting a pre-approved home loan:

• Your credit score will have a big impact on the interest rate you are offered. A good credit score will qualify you for a lower interest rate, which will save you money in the long run.
• You will need to have a good debt-to-income ratio. This is the percentage of your monthly income that goes towards debt payments. A good debt-to-income ratio is typically below 36%.

Conclusion

Securing a pre-approved home loan is a prudent step in your homeownership journey. It empowers you with the knowledge of your budget, streamlines the application process, and enhances your negotiating position. By knowing the steps and clearing up any confusion about what is a pre-approved home loan, you can confidently explore pre-approved home loans. So, armed with knowledge and confidence, you’re all set to turn your home ownership dreams into a wonderful reality.

FAQs about Advantages of Pre-Approved Mortgage Loans