A mortgage is typically the largest financial liability of an individual. It is also the biggest financial investment most people make in life. Thus, one has to be extremely meticulous and well informed about everything pertaining to a mortgage loan. You may have come across the term, mortgage preapproval, and you might have wondered what it is all about. In this guide, we shall shed light on the basics of mortgage preapproval, its significance and a few tips.
What is Mortgage Preapproval?
Mortgage preapproval is a process in which banks and financial institutions, mortgage lenders, would evaluate if a prospective homebuyer is eligible for a mortgage and shall promise to approve the mortgage application as and when it is put forth. Therefor a mortgage preapproval is a proactive step taken by homebuyers and is also encouraged by banks, financial institutions, property owners and real estate companies or property developers.
Why is Mortgage Preapproval Important?
A mortgage preapproval allows a homebuyer to know if he or she would eventually get the mortgage or at the very least, be eligible for a mortgage – including how much could be borrowed. It may so happen that a homebuyer likes a property but then cannot buy it as banks deny their mortgage or home loan application. In that sense, a mortgage pre approval is extremely significant as a homebuyer can safely go around checking properties within the budget or loan amount that he or she has qualified and has been preapproved for. From the perspective of property owners or sellers, mortgage pre approval is very significant as they know for certain that a prospective homebuyer can eventually buy the property if he or she likes.
Today, property owners and real estate agents, property developers and banks as well as homebuyers prefer to go for mortgage pre approval.
The Process of Mortgage Preapproval
The mortgage preapproval process is the same as the approval procedure of an application. All checks, verification of applicant’s details and assessment of financial profile are done with due diligence. The process is complete excluding the last step where the home loan is disbursed to the applicant.
Mortgage preapproval is an otherwise simple procedure but getting preapproved is as likely or unlikely as getting the actual loan.
