If you have never purchased a house before or applied for a home loan, you may not know what a pre-approval is. While you don’t need a pre-approval to purchase a property, it can make the purchase a bit quicker, easier and less complicated. This article is designed to tell you everything that you need to know about pre-approvals.
If you’re thinking about buying a house and applying for a home loan, it is a good idea to get a pre-approval. While you don’t need to have a pre-approval to buy a property, it certainly makes things a bit easier if you do! A pre-approval is an indication from a lender that you’re eligible to apply for a home loan up to a certain limit.
Advantages of a pre-approval
A pre-approval looks good to the seller when you make an offer
It shows sellers that you’re serious about buying a home and you’re confident that you can afford it. Pre-approvals provide you with increased negotiating power when it comes time to agreeing upon a price with the seller. This makes your offer appear more attractive to the seller and more likely for them to accept it!
Move quicker in the buying process
With a pre-approval, if you decide to make an offer on a home, you’ll be in a position to move quickly.
Bidding at Auctions
Auctions are becoming a popular way to sell a house. Having a pre-approval in place is essential if you wish to bid at an auction. When you purchase a property through an auction, there is no cooling off period and if you are the highest bidder, you’re committed to the purchase. You need to have certainty that your finance will be approved! A pre-approval gives you the certainty you need to be able to confidently make a bid at an auction, without fear of not having the finance approved!
Pre-approvals don’t last forever
Pre-approved home loans don’t last forever, as peoples financial situation is bound to change over time. If it’s been more than four weeks since the pre-approval, you will need to reverify income and other financial details.
Interest rate changes could affect your pre-approval
Interest rate changes can always happen unexpectedly. If there is an interest rate increase, the maximum amount that you are able to borrow may decrease.
Getting a pre-approval
Contact your lender or mortgage broker about getting a pre-approval. They will help you through the process of applying for a pre-approval. If you are in Cairns, contact our friendly team at Preston Finance and Insurance on ph 40520750