What Is A Home Loan Pre-Approval?

When you are buying a home, one of the most important things to do is get pre-approved for a mortgage. What does that mean and why is it so important? Read on to find out!

Most mortgage brokers recommend obtaining a pre-approval before putting down a deposit on a home. Pre-approval is when your lender gives you conditional approval to borrow money for your desired property — before you’ve even found it. This isn’t unconditional approval, so nothing is etched in stone until the end and the lender may still reject your final loan application.

It puts you in a better position with the seller, but remember that it will be recorded on your credit report whether you continue with your application or not. As a rule of thumb, applying with numerous lenders at the same time is something you should avoid since it can influence your borrowing capacity in the future.

One of the most significant benefits of pre-approval for a mortgage is that it provides a specific amount you can spend on your future house. This might help you narrow down your search and avoid spending time on properties that are out of your price range.

When you do locate a home you’d want to purchase, pre-approving financing allows you to concentrate on the price talks rather than juggling the hassle of getting a house loan at the same time.

Many lenders provide pre-approval, however the type of pre-approval accessible to you will vary. Your Aussie Broker can help you determine which lenders provide the loans that are suitable for your needs, as well as allowing you to apply for pre-approval.

The lender will evaluate your credit history and current financial situation to see if you are likely to make loan payments during the pre-approval process. The approval of your application is contingent on your circumstances remaining the same. A major life change, such as quitting your job to start a new business, might result in an outright refusal of unconditional approval later on.

It’s worth noting that pre-approval does not last indefinitely; it is generally limited to a specific period, usually three to six months.

If you have been declined credit, or feel like you’re not getting the best interest rates due to your credit score being too low, then contact Clear Credit Solutions today. We are the credit repair experts when it comes to clean credit history and can help remove negative listings that are impacting your score. This will give you a better chance of being approved for a loan and could save you money on interest rates. Get in touch with us to find out more about how we can help you achieve clean credit!