Mortgage pre-approval is a guarantee from the creditor that you are qualified to borrow a specific amount at an explicit interest rate, depending on various eligibility elements.
With a pre-qualified promise, borrowers can get the home that they want due to their trustworthiness.
What does pre-approval mean?
Pre-qualified or pre-approved for a Home Loan means that the lender is confident that you have the skill to pay the down payments and have an income to cover Home Loan EMI payments.
The first move
You must check your CIBIL score before starting a pre-approval for the loan. By doing this, you may get an idea about what type of loan you may land up or meet the criteria and you will have the time to pass all possible hurdles in front of your Home Loan application.
Things that you need for a Pre-Approved Mortgage
Furnish all information such as tax returns, pay stubs for the last two years and documents that showcase all income sources including second job, bonus and commissions, overtime, dividend income and interest social payments, retirement benefits, child support, alimony and VA.
You should also give information to your lender about the total movable and immovable assets that you have. You may also include bank statements and investment that you have made over the years. If you have received money from a relative, you should also include into this.
You will need to also give information in the form of various Identity cards. You don’t need to know your credit score as your lender will furnish it.
Why pre-qualification is essential?
When you are ready to go for a buying bid on home, the real estate agency and the seller will have a look at a pre-approved letter. The document states that you are eligible to seal the buying offer and is a serious contender.
Mortgage loan request process
Pre-qualification is the casual practice where a borrower is scrutinized by a credit representative about the assets, expenses and incomes in your possession. The process provides with an idea of your Home Loan eligibility. Although, this process does not put you forward towards securing finance for your home purchase, it surely gives you insights about the future of the deal.
Pre-approved for a mortgage means that a lender has already reviewed your credit reports, income and of course the employment history and denote which loan offers your profit fits in, the maximum loan amount that you are entitled to and the housing loan interest rate that you have landed up.
Your house loan may be approved after you provide details about tax returns, income sources, pay stubs, W-2s from last two years, bank statements of two months among other elements.
The computerized system may convey an approval letter quickly and may contain some conditions which you still need to fulfil or match for a final consent.
Also Read: How to Get a Pre-Approved Home Loan
A financial lender may issue a loan commitment after they approve the home that you want to buy and also your profile. After they review all necessary documentation to scrutinize the willingness and ability to repay the Home Loan, your Home Loan application submits online.
The lender may come up with some results such as:
Approved but on some terms and conditions
Suspended (More document authority needed)
Denied or rejected
The Bottom Line
If you want to fasten your process of home purchase with the help of a Home Loan, you must know that a pre-approved credit is vital in your overall home purchasing procedure.
Even if you an application rejected, you can still try from another service provider to whom you must give valid reasons about why your application stands a dignified clearance.
By understanding the discussed steps of pre-approved process of mortgage, you take a foot forward in residing in your choicest abode!