Top Six Things You Need to Know About Pre-approval for Loans

By Deltos Finance on May 16, 2023
A lender checking a home loan pre-approval application

Get Ahead of the Game: How Pre-approval Can Help You Obtain Your Dream Home

Are you in the market for a new home? Congratulations! Homeownership is a big step towards building the life you’ve always wanted. But, before you start browsing listings and imagining your dream home, it’s important to get your finances in order. Which begins with pre-approval for a loan. With pre-approval, you’ll have the confidence to make an offer on a property that fits your budget and lifestyle. At Deltos Finance, we assess your financial situation, budget and goals to get you a pre-approved home loan. But for now, let’s focus on discussing the top things you need to know about pre-approval for loans.

1. What is pre-approval, and why is it important?

Pre-approval is when a lender assesses your financial situation and determines how much money they are willing to lend you. It typically involves a credit check, income and employment verification, and financial history review. 

Home loan pre-approval is important because it gives you a better idea of your borrowing power. It helps you shop for a property within your budget and can turn you into a more attractive homebuyer for sellers. Simply put, it’s a good first step in your home-buying journey.

2. How is pre-approval different from pre-qualification?

Pre-qualification is a less formal process than pre-approval, where a lender estimates how much you can borrow based on your self-reported financial information. The former is a useful step to help you understand your borrowing power, but pre-approval is a more comprehensive and reliable assessment of your ability to borrow. If you’re serious about buying a property, we highly recommend you get pre-approved rather than just pre-qualified.

3. How long does a loan pre-approval take?

The length of pre-approval can vary depending on the type of loan and bank or lender’s requirements. Typically, pre-approval lasts around 90 days to six months, but some lenders may offer longer or shorter periods. Keep in mind that pre-approval is not a guarantee of a loan, and the final approval will depend on factors such as the property valuation and any changes to your financial circumstances.

A person signing loan document

4. What are the benefits of pre-approval?

Surely, getting pre-approved for a loan comes with many benefits. 

Firstly, pre-approval gives you a clear idea of your borrowing power, which can help you shop for a property within your budget. Secondly, pre-approval can make you a more attractive buyer to sellers, as it shows you are serious about buying and have taken steps to secure financing. Finally, pre-approval can help you quickly move when you find the right property, as you already know what you can afford. In turn, you can confidently make an offer on a property.

5. What are the potential drawbacks of pre-approval?

While pre-approval is generally a positive step for home buyers, there are some potential drawbacks to keep in mind. For one, pre-approval can be declined if there are changes to your financial circumstances or if the lender’s assessment of your financial situation differs from your own. Also, getting pre-approved typically involves a credit check, which can temporarily lower your credit score. But, this impact is usually small and short-lived and should not be a major concern.

6. How can you improve your chances of getting pre-approved?

Fortunately, there are several steps you can take to improve your chances of getting pre-approved for a home loan, investment loan or any type of loan. 

First, keep your credit score in good shape by paying bills on time and reducing outstanding debts. Next, have all the necessary documentation ready, including proof of income and employment. Finally, work with a reputable lender who can help you navigate the process and offer expert guidance.

Let Deltos Finance Help You

With these details and tips on how to get a home loan pre-approval, you can be one step closer to your dream home or investment property. But as mentioned, it’s vital to work with a reputable lender who can point you in the right direction and answer any questions you may have. A good lender will take the time to understand your financial situation and goals. Best of all, they will provide expert guidance on the loan options best suited to your needs.

At Deltos Finance, we understand every home buyer’s situation is unique. So we’re committed to providing personalised service and expert guidance to help you achieve your homeownership goals. Whether you’re a first-time buyer or an experienced investor, we can help you navigate the pre-approval process and secure financing that meets your needs.

Ready to start your homeownership journey? Contact us today to learn more about our loan options and pre-approval process. We look forward to working with you!

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