Getting a loan pre-approval
Why home loan pre-approval is very important
Before you start shopping for your dream home, it is a good idea to get your finances in order. Getting a house and land loan pre-approval from a bank or financial institution will not only help you set your budget, but it is an important step towards minimising your financial risk.
When you approach a lender to request that they grant you a mortgage, they will use the information you give them to assess how much money they are willing to loan you. This essentially helps you to establish the budget for how much you can really spend.
A home loan pre-approval is a letter from your bank or financial institution saying, in principle, how much money you can borrow to buy your new home. It is not a guarantee and it is subject to change – for instance, if you lose your job between getting pre-approval and finding your dream home, then the bank may decide not to proceed with the mortgage because your financial circumstances are too risky.
For further information, read the full article here.