All You Need to Know about Pre-Approved Loans
Jun 12, 2018 Home Loan
Pre-approved loans basically help you to know about your loan eligibility which further helps you to calculate and plan your finances accordingly. But home buyers are often confused about whether to opt for pre-approved loans or home loan to finance their home purchase. It is advised that first calculate your other associated cost and then you can probably plan for it.
A pre-approved loan is a tool to attract customers by the banks such that the customers can avail its facilities without much hassle. Till the home loan gets approved, home buyers remain in uncertainty about their home loan approval status. However, in case of a pre-approved loan, there is not the uncertainty as the customers already get the home loan facility even before making the purchase decision. The pre-approved loan gets sanctioned on the basis of the primary verification done by the banks or lending institution to understand customer’s credibility to pay off the loan. Pre-approved loans come with validity that is the loan is valid for a limited period of time about three to six months and the borrower needs to complete the transaction within that period of time before the approval gets expired.
Pros and cons of pre-approved home loans
One of the prime benefits of pre-approved loans is you can plan your finances beforehand. Planning lets you understand how many loans you can avail, what budget suits you and which property you can afford, making you more focused on your choice and preferences. Also, a pre-approved loan identifies you as a serious buyer in from of the builders or the sellers that help the buyer to negotiate for a better deal. In case of pre-approved loans, only credit record of the applicant along with financial documents are evaluated which makes the process much faster as compared to the usual home loans.
But according to the experts if the interest rates get reduced during the pre-approval or disbursal process then the borrower might not be able to avail the benefit of the lower rate as the rate of interests are already decided. If the borrower does not avail the pre-approved loan or if the time limit has expired, then the processing fees do not get refunded. However, the customer can make a request to extend the validity period.
Here are some key points to keep in mind while availing the pre-approved home loan. You should only apply for a pre-approved loan after selecting few of the potential properties. The frequent applications can decrease the credit score of the borrower. Go through the terms and conditions thoroughly for making the payment and prepayment. Before applying understand the benefits and offers clearly. Be sure about the penalties and charges that you have to pay.
But remember don’t just buy a property because you have a pre-approved loan. Make decision very carefully after analysing all the aspects.
A pre-approved loan is a tool to attract customers by the banks such that the customers can avail its facilities without much hassle. Till the home loan gets approved, home buyers remain in uncertainty about their home loan approval status. However, in case of a pre-approved loan, there is not the uncertainty as the customers already get the home loan facility even before making the purchase decision. The pre-approved loan gets sanctioned on the basis of the primary verification done by the banks or lending institution to understand customer’s credibility to pay off the loan. Pre-approved loans come with validity that is the loan is valid for a limited period of time about three to six months and the borrower needs to complete the transaction within that period of time before the approval gets expired.
Pros and cons of pre-approved home loans
One of the prime benefits of pre-approved loans is you can plan your finances beforehand. Planning lets you understand how many loans you can avail, what budget suits you and which property you can afford, making you more focused on your choice and preferences. Also, a pre-approved loan identifies you as a serious buyer in from of the builders or the sellers that help the buyer to negotiate for a better deal. In case of pre-approved loans, only credit record of the applicant along with financial documents are evaluated which makes the process much faster as compared to the usual home loans.
But according to the experts if the interest rates get reduced during the pre-approval or disbursal process then the borrower might not be able to avail the benefit of the lower rate as the rate of interests are already decided. If the borrower does not avail the pre-approved loan or if the time limit has expired, then the processing fees do not get refunded. However, the customer can make a request to extend the validity period.
Here are some key points to keep in mind while availing the pre-approved home loan. You should only apply for a pre-approved loan after selecting few of the potential properties. The frequent applications can decrease the credit score of the borrower. Go through the terms and conditions thoroughly for making the payment and prepayment. Before applying understand the benefits and offers clearly. Be sure about the penalties and charges that you have to pay.
But remember don’t just buy a property because you have a pre-approved loan. Make decision very carefully after analysing all the aspects.
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