Get Pre-Approved before you house hunt
We all have our dream house in mind, whether a mansion in the hills, a luxurious townhouse or a countryside house with picket fence on lush acres of green landscape. But sometimes our taste and preferences are just not able to materialize due to our inability to afford such properties, even with the aid of a mortgage loan. You can start by working to accumulate enough equity or financial stability to one day buy or build your dream home and to even expand your real estate portfolio.
We all get to that stage where we start to think home owership and get excited by the possibilities that can take place as a home owner. But before this is aggressively explored and house scouting starts in earnest, there?s one basic step that is highly recommended.
Seeking a mortgage pre-qualification or pre-approval first will help to guide you through the process. Getting pre-qualified is the preliminary stage, where basic unverified income details and expenditure details are provided to a financier who will then determine if you can qualify for a loan amount and the amount that can be loaned to you based on your total debt income ratio.
The pre-approval carries more weight than the prequalification, as it is granted based on verified financial statements provided to the financier. The pre-approval letter highlights the amount that the financier is committed to financing, which automatically dictates what you can afford to purchase.
With this information, you are able to shop around comfortably in the price range that you are qualified for- so you don?t waste time looking for properties that are outside your budget or short change yourself by looking at properties that are way below the amount you qualify for based on ignorance.
This letter is usually valid for about three months and in addition to its use for personal reference when scouting for properties, this document is also required by many realtors and property vendors, who use this as ?proof of buying ability? to determine the direction and progress of negotiations.
Documents required for a pre-approval include:
- Income Documentation to include last three recent pay slips
- Proof of Identification
- Copy of TRN card
- Proof of Loan Balances (credit card payments, mortgages, monthly car payments etc.)
When these documents are received and information verified, you will receive a letter indicating your successful pre-approval and the amount.