Home Loan Pre-Approval Explained

Home Loan Pre-Approval Explained

If you can't get the money, you can't buy the home. Before you start looking for a home, you need to know if you have a lender or bank that will lend you the money. This is where getting a "Pre-Approval" comes in.

First Things First

FACT: Pre-approval is not a guarantee that you will get the loan you need for the property you want.

A mortgage pre-approval means your lender has agreed, in principle, to lend you an amount of money towards the purchase of a home. This is pre-approval and comes before you formally proceed to full or final approval. If you're approved, it's for an amount, not a specific property, and it's not 100% guaranteed. The bank will still need to formally approve your loan for the specific property you want to purchase.

The Benefits of Pre-Approval

If you receive a pre-approval from a lender, it will be for (or up to) a specific amount. This allows you to focus your house hunting on properties you can afford. Pre-approval can also make your offer on a property more attractive to the seller, showing that you are a serious buyer and your offer is less likely to fall through due to lack of financing.

Pre-Approval Can Take Longer Than You Think

You will need to submit full loan documentation and have your finances carefully scrutinized, which can take a reasonable amount of time. Be cautious with your house hunting until you get a proper pre-approval in writing. You don't want to be signing a contract if finance is going to be difficult. Without an officially signed statement of loan pre-approval, some sellers and agents won’t accept your offer, and you can’t guarantee you’ll get the finance.

Conditional approval, as it sounds, is based on certain conditions that must be met to move to final approval. Final or unconditional approval is the final guarantee that you’ll receive finance for a property.

Mostly, if you have done everything properly for pre-approval and the property is valued correctly, there should be no major problems moving to final approval. However, various issues could jeopardize your final approval, such as:

• Changes to your personal circumstances (e.g., loss of income)
• Changes to government regulations
• A negative valuation of the property

Note: Interest rates and lending policies are subject to change. Nothing is final until the final approval and loan documents are signed.

Welcome Home

At JKL, we’re here to support you through every step of your home buying journey. Our experienced team will guide you through the pre-approval process, ensuring you’re well-prepared to secure your dream home.

Experience our JKL real estate family. We’ll put the welcome mat out for you!