House hunting? Get a home loan pre-qualification first.
Category Advice
Affordability, increased cost of living and the possibility of rising interest rates could make you fearful of entering the market for fear of rejection by lending institutions. However, there are ways to guarantee that your offer to purchase is solid and credible. Getting prequalified can help take some of the uncertainty out of the buying process.
Being proactive and getting yourself prequalified shows sellers that you are serious and gives you a realistic idea of what you can afford and what your repayments will be every month.
Getting prequalified allows you to get a realistic idea of the price range of properties that you can look at. It also lets sellers know that you are serious about your offer to purchase and that you have guaranteed access to the finances to make good on your offer. Being prequalified puts you in an excellent position to get the property that you are after.
Getting prequalified will most likely happen via a bond originator, who will usually ask for your financial records in the form of your bank statements and payslips for the past three to six months. They pair this information with a freshly done credit check that provides your credit history, score and blacklist status. This helps the originators establish how equipped you are to contend with monthly instalments that will possibly last for the next 20 years. Once the information is analysed, you are given a report and an amount that you qualify for. Maintaining a good credit score by having high disposable income and low debt figures will stand you in good stead with lending institutions and will allow you to negotiate a better interest rate when borrowing.
The prequalification certificate that is issued is valid for three months, and thus gives you a three-month window to make offers that are within your range. The only proviso being that you will need to go through the application process again if anything concerning your financial standing changes within the three-month period. The prequalification certificate can, however, be revalidated after the three-month period has elapsed.
Once you have your eye set on your property of choice and you have made the offer to purchase, your bank will come back to you with an offer of a home loan at a given interest rate, the cost of the credit, as well as any terms and conditions that need to be met in order for the home loan to be approved. If you accept the bank's offer, then you are on your way to being a property owner and the bond will be registered in your name by an appointed attorney.
Being proactive and getting yourself prequalified shows sellers that you are serious and gives you a realistic idea of what you can afford and what your repayments will be every month. Prequalification is a wise, mature course of action and is a very clear sign that you are serious about the property buying process.
Author: Extracts - Property 24
