Pre-Approved
Home Loans
(and why time-wasters should
avoid them)
FACT:
Pre-approved home loans are the way to go now days. Pre-approved
home loans mean that no longer do home buyers have to spend
hundreds of hours searching for the perfect home only to
be turned down by the lending institution. With a pre-approved
home loan or pre-qualification letter, a buyer is in an
immediately better bargaining position in regards to the
seller.
Sellers are much more
interested in showing their homes and negotiating with someone/s
who already have a pre-approved home loan. This is because heartbreak
works both ways. No longer do seller have to spend hours cleaning
and straightening and making arrangements with their real estate
agent for showing their home, only to find that the buyer does
not have a pre-approved home loan and has been denied a loan by
their lenders. In fact, now many sellers will only show their
homes to those with pre-approved home loans under their belts.
Sellers regard this group as serious buyers rather than weekend
lookers.
Both buyers and sellers
need to know the difference between pre-qualification and pre-approval.
Pre-qualification is an informal agreement between you and your
lender. The bank gives their opinion on how much they think they
will be able to lend to you based on information that you have provided
to them. Your lender will not do any background checks at this point.
It relies solely on you portraying an accurate picture of your financial
circumstances. Because this is more like a friendly handshake, the
lender can decide not to give you the loan if they find out later
that you have been less than candid with them.
Pre-approval is for
the serious-minded. With a pre-approved home loan, the lender will
actually check credit history, employment information, assets and
liabilities. The only thing the lender won't check is the property
that you plan to buy. This is because you're still looking for it.
For those who are concerned that they might not qualify for a mortgage,
it is highly recommended that they go for pre-approval. A pre-approved
home loan takes much of the worry out of looking and keeps one focused
on searching for homes within their price range. This still doesn't
mean your loan will be approved since the lending institution will
still need to take a look at the home you intend to buy, but the
odds are more in your favor than with a simple pre-qualification.
Even one-step more secure
than a pre-approved home loan is a loan commitment. Banks
and other lenders will not issue a loan without checking
out both you and your new home. The bank may run additional
financial checks on the buyer plus the home must appraise
at or higher than the sales price. The home's title must
also be clear and free of problems. The loan commitment
happens only once you've found a home. While you're looking,
though, getting a pre-approved home loan will make the process
go smoother and save a lot of heartache in the end.
Fiction:
you may be the type of person who likes to waste your time
and the time of others. In this case, a pre-approved home
loan is not for you. Since pre-approval saves time and you're
a time waster, then this is just a conflict that you must
avoid. Remember that your real estate agent and all others
involved in the loan process have nothing better to do with
their lives than the cater to your poor planning. And, of
course, you have nothing better to do than waste your own
time, longing for something you can't afford, never will
afford and should not even dream about affording. Yes, I
said dream about. Get a lobotomy so that you can stop dreaming
now. Or pick up an alcohol addiction. Either or.
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