The idea of being a homeowner generates so much emotion, not to mention hopes and dreams. However, a rapidly rising property market and changing expectations may be making it harder to get you into your first home. It is crucial that first homebuyers look at their first purchase as a way to get into the market, which they can leverage off to make a second purchase.
A crucial step in the process of purchasing your first home is arranging a pre-approval.
Having found your desired first property, it’s time to get in touch with your broker, attend a loan interview and get approved for a home loan. It seems obvious, but don’t forget to consider getting pre-approval for your loan. A pre-approval is normally a written statement from a lender’s preliminary assessment that a borrower would meet the requirement needed for a particular loan amount under the lender’s guidelines. The determination and loan amount is based on income and credit information and most pre-approvals are valid for 60 to 90 days. Your broker will help you understand which documents and information are required for your pre-approval.
A pre-approval is confirmation from your lender, stating how much you are expecting to borrow. It will help you set a realistic budget. There are many reasons why you should get pre-approved and the most important reason is that you will get a specific idea of how much you can afford to spend on your first home. This can help you narrow your home search and ensure you only look at houses that are within your price range.
A pre-approval also helps you confirm to real estate agents and sellers that you’re a dependable buyer and that you can act fast when you find the home you want to purchase. Not only that it shows your credibility as a buyer, but it also implies that you’re serious to move forward with confidence when you find your perfect first home.
Procedures may vary from lender to lender, but it is expected that you will be issued with some sort of documentation confirming that you have been granted pre-approved status. With this, you may be subject to a few conditions on whether your home loan either has been or will be, approved by the lender when you find the property you want to buy. One of the main conditions is often a valuation of the property to make sure that the property will meet lender security requirements.
If you find your pre-approval has expired or is about to, discuss the details with your broker and see if it can be extended or whether you will need to re-apply. Buying your first home is an incredibly exciting feeling, but it can also be a complex process. As always, be sure to consider consulting with your home loan specialist, who can use their experience and expertise to help you and guide you through your purchase.
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