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What To Know About Pre-Approved Home Loans

India's First Time Home Buyer Checklist

Benefits of a Pre-Approved Home Loan

Are you looking for a way to attain a good home loan? Maybe you have gone through several different options for banks that can provide you with home loans. Or maybe you have already made up your mind and still want a few decent points that will help you get the most out of your entire home loan process.

But there is another option that can help you attain a home loan in an even better way. This process is called pre-approved home loans. These loans are little different from regular home loans, but they do contain some incredible benefits. But before talking about their benefits, let us take a look at what exactly pre-approved home loans are.

What are pre-approved home loans?

Pre-approved home loans are basically the principle sanctions that are given by banks in a particular home loan amount. But banks follow a scrutinized process to decide what would be the loan amount. This process asks you to submit a huge amount of information, which will include your bank account statements, your tax returns, your complete income proof, your identity proof, your salary slips, your PAN details, and a few more things depending on different banks.

Banks will also use the data by CIBIL to check your credit history to make sure you are not a liability. Once the bank has completed its scrutinizing, it will approve the loan and give you a letter that will acknowledge the pre-approved amount for the home loan. This pre-approved loan will only be valid for a particular period at the maximum of six months. And, if you miss the deadline then you will have to go through the entire process once again.

Banks will charge pre-approved loan processing fee, which will be refunded if the loan is sanctioned, while some banks do not ask for any processing fee at all.

Advantages of a pre-approved home loan

Here are the benefits of attaining a pre-approved home loan:

Helps you narrow down your home search

The process of pre-approved home loans helps you narrow down the search for your home. It enables you to stay within your given budget and not aim for the homes that can be completely out of your range. Many people suffer from choosing a home they think they would be able to cover from loans, but the loan that comes after the home has been chosen can be out of their budget and can make them suffer through financial challenges.

Gives you better negotiation ability

When you have the pre-approved loan letter in your hand, you can negotiate with the homeowner in a better way. You can cut above other buyers as you will have a proof of financial means to buy the home at all times. This can help you turn things in your favor as the homeowner will consider every other buyer to be a long process, while you will be the best way to close the deal in just a couple of days.

The home buying will be quicker

Since you will have the means to close the home deal at a moment’s notice, you will be able to buy the home much faster than a normal home loan. All you will have to do is to show the pre-approved loan letter to the homeowner and then initiate the money transfer process. Your bank will take care of the rest, and in just a few days you will become a homeowner.

Thus, these are the few benefits of getting a pre-approved home loan. This type of home loan not only aids you to get a house within your budget but it also gives you better negotiation skills and augments the whole home purchasing procedure.

Jay Kaul

About Jay Kaul

Jay is a financial and credit expert and freelance contributor to CreditSmart. He's always keeping his eyes open for the latest credit card trends in India and provides a sharp insight on new entries into the market.

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