What is pre-approval and why should you get it?

house keyIf you’re looking to buy a new home this year then one of your first steps is to get your finances in order.

A lot of buyers get pre-approval before they make an offer on a property so that they know how much money they should offer.

For those who haven’t heard of pre-approval before, it is when a lender provides you with a set loan amount for a property that is subject to certain conditions such as valuation and building/pest inspections.

Pre-approval can help take the stress out of property negotiations as it gives prospective buyers a solid price range they can work within.

It is strongly recommended that anybody thinking about buying a property talk to a broker or lender to secure pre-approval.

There are websites that can help give you an idea about the amount you can borrow, but pre-approval from a broker or lender will give you a more reliable estimate and it also means that the lender will already have all of your personal information such as employment, income, assets and liabilities, so they will be able to fast track your loan application when you are ready to make an offer.

A pre-approved loan is usually valid for up to 90 days, and while it can be a good indicator of how much you can borrow, keep in mind that it is still meant as a guide, as there is no guarantee that a lender will give you final approval until all details about the property and your situation are known.

But having pre-approval can be extremely helpful as it allows you to move fast on making an offer and increases your chances of securing a property.