New Home Pre Finance

Finance Application

Home finance application easily explained?  Well, needless to mention, looking forward to buy a new home is an exciting yet challenging experience. In any case, buying a home is easily one of the greatest investments one may ever make. When doing so, it is ideal to maintain a level head & be practical about what exactly you can afford. A majority of buyers will have to borrow money in order to finance the home purchase. Hence, before keeping a step forward, it is important to find out the amount you can borrow. In fact, you should have a good pre finance strategy in place.

It’s of paramount importance that you shop around to explore your options so that you are able to find the best deals! Luckily, most of the lenders have online mortgage calculators for you to get a quick clear idea of the amount of money you can borrow; all you need to do is furnish a few details.

Before making any big decisions remember to seek professional advice. Okay, when applying for your pre-approved loan, you have to provide some extra documentation including:

• Proof of income
• Proof of deposit
• Monthly expenses & other outgoings like loans, store cards and credit cards.

If you can fulfill the requirements, nothing can keep you from having a pre-approved loan!

Benefits of getting a pre-approval loan from a lender 

• A pre-approved loan is free, valid for up to three months, and gives a clear idea on how much you can spend.
• It enables you to shop confidently.
• It shows your real estate agent how serious you are about buying a home.

Conditions of pre-approval

• All information provided to the lender to assess eligibility must be true and correct.
• The lender must receive all the documentation necessary to check security, deposit, liabilities, assets and income.
• Verification of both personal and financial details
• Lenders’ satisfactory assessment of any property provided as security for the loan of your client
• Whether Lenders Mortgage Insurance is needed; if needed, the loan will be offered only if the insurer shows consent to provide the insurance, The Lenders Mortgage Insurance Premium must be paid by the borrower as well.

As soon as you have found your dream home, a formal approval is required. Full approval can take just one hour or a few days provided valuations are required.

Well, prior to applying for a pre-approved loan, you must ensure that you are informed of the reason why some loans are rejected. Doing so, you can be certain that you meet the criteria even before applying – of course, the last thing one would want is many different loan applications showing up on your credit report!

Let’s have a look at what the common reasons why loan applications are declined: 

• The income cannot be documented properly.
• The credit rating is low.
• There are too many enquiries on the credit file. If there are a lot of loan applications appearing on the credit report, the lender may think that you are not sharing the full story.
• Situation has changed all on a sudden, for instance, you have changed jobs recently or obtained another type of loan.
• Lender’s policy has changed. A few lenders will honor pre-approvals which are lodged prior to their policy changes.
• There is an increase in interest rates; as a result, the maximum amount you can borrow could decrease.
• The loan amount is over 80% of the property value.

So don’t forget to be prepared when choosing to buy your first home. Of course, a mortgage broker can be of great help. Whatever be the case, plan well in advance and strike the best deals out there!  If you found this article helpful you may also appreciate this one here.