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What You Need to Know About Home Pre-Approval

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If you want to be a homeowner soon, getting a pre-approval can sometimes be nerve-racking. Through this post, Excellence Finance‘s experts share with you what there is to know about home pre-approval. Questions such as how long do the home pre-approval last, what does it involve and when it is necessary will be answered. 

What is a Home Pre-Approval? 

When we talk about pre-approval, this is the lender’s assessment of the likelihood that you will be approved for the loan. This appraisal is based on your ability to pay the loan and the lender will look into your current living expenses, liabilities, employment, and credit history. 

The pre-approval is performed before a property is found and chosen. Remember that it does not include the particulars of the property and valuation. This means, there can still be uncertainties. 

Pre-approval is important for those who wish to know how much they can borrow. This saves time attending open homes and even reassures the borrowers. 

Generally, pre-approvals are valid for 90 days. However this depends on the lender and may be renewed, giving more time to choose a suitable property. 

Be aware that pre-approval is not a guaranteed loan. This is just a gauge of the offer your lenders might approve and may change when you officially apply for a home loan. We also encourage you to speak with your finance broker about lender policies as these change from time to time. 

Is It Possible to Get Declined by a Lender After a Pre-Approval? 

A lender may decline your application even after a pre-approval if your circumstances have already changed such as employment or your liabilities. The lenders will have to check if the borrower hasn’t got another car lease or obtained a new credit card which may affect their overall income and serviceability (Borrowing Capacity). 

Additionally, the lender will check if your property is within lenders acceptable postcode area.

If the property is outside the postcode area, lender may not approve your application. The lenders also want to check if the actual security itself is acceptable. 

 

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