What does a pre approved home loan actually involve?
A pre approved home loan helps you to get a loan approved in advance with the housing finance company or bank checking all parameters including your credit history, loan eligibility amount, employer details and finally approving a home loan, in advance. The housing finance company or the bank as the case may be will issue you a pre-approved loan certificate.
However, there is a validity for the loan that is approved for a period of six months. This means that you have to identify the property within a period of six months, or else the pre approved home loan stands null and void and you would lose the processing fees paid.
Quick loan disbursal
A quick loan disbursal is possible and should you be buying a ready property, it could be immensely helpful.
Ability to negotiate
A pre approved home loan makes you a serious buyer and improves your chances of negotiation with prospective sellers.
Most banks do take a pre approval home loan charge and do refund it once you have availed of a home loan.
It's important to note that though you may have a home loan approved, it does not compel the bank or the housing finance company to lend. A lot would depend on the property documents that would undergo verification.
Should you opt for it?
It's definitely advantageous to go in for a pre approved home loan, provided you ensure that you can identify a property within a period of six months. If you are unable to do so, you are likely to lose the amount you have paid by way of processing fees.