Home loans are secured against a borrower's property. Most people do not have ready cash to buy a home. In such a case, a loan may be secured from brokers or banks against the value of property to be purchased. Borrowers may visit banks, contact brokers or visit websites and compare various rates of interest offered by online companies. Pre-approval is a process of checking financial position of a borrower in detail. Borrowers may get pre-approval from lending institutions that would be a strong point for the borrower to apply for home loan.
To get pre-approval, borrowers may contact lenders and compare rates of different lenders to select the best one. Lenders are advised to check the financial position of borrowers before going in for such a pre-approval process. Lenders may examine credit, verify employment and annual salary, and also checks on borrower's outstanding debts prior to pre-approval. Borrowers' assets are also assessed to determine how much money borrowers may pay towards down payment.
Sometimes lenders may want to ensure that borrowers are financially strong. Lenders may ask for federal tax returns of last two years, borrower's purchase agreement in case such an agreement is available with the borrower, profit and loss statement if the borrower is self employed, last two years corporate returns if borrower owns a corporation and bank statements of last three-months to verify whether borrower would be in a position to shell out down payment. If the borrower is divorced then lender may want a copy of divorce papers also.
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Process of pre-approval takes about one week but it is suggested that borrowers should get pre approval well in advance. If borrowers get pre approval then borrower can get better services from sales agents.
Borrower should compare different rates quoted by lenders. It is suggested that borrowers spend enough time in verifying credentials of lenders. Pre approval makes it much simpler for borrowers to purchase a home.
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