Pre-Approved Home Loans With Bad Credit: Why It Is Worth The Effort
Securing a mortgage can be a stressful process, but it is only to be expected that mortgage providers carry out detailed reviews of applicants. The problem is the time it takes. With that in mind, it may be worth seeking a pre-approved home loan with bad credit, to counter delays in closing on a property deal.
The chief concern for those of us who have found our dream home, and are anxious to complete the purchase, is time. Taking 90 days to get news on whether the funds will be released or not is almost too hard to bear. But with pre-approved mortgages the search can begin in the confidence that the funds are already available.
Still, the concept needs to be understood clearly before any applicant should rush to get a pre-approved home loan. That is why we have put together this brief guide on some of the key points.
What Does Pre-Approval Really Mean?
Actually, it is pretty self-explanatory. Applying for a pre-approved home loan with bad credit basically means that the required funding to buy a home is confirmed as available before the search for a home begins. The process involved in securing the approval is precisely the same as normal applications.
What is different is that a lender will give a successful applicant a letter verifying that a certain amount of funds has been approved and is available upon request. This letter is a guarantee of a pre-approved mortgage, so when producing it, it is as good paying.
While approval will still take between 60 and 90 days, the result of getting a home loan pre-approved is that the concern over funding is gone. So, the search for the right home can receive your full attention.
Other Useful Advantages
While getting a pre-approved home loan with bad credit does offer a great deal more convenience and peace of mind, there are other useful advantages to it too. For a start, it puts the home hunter in a much stronger negotiating position.
When negotiating a price, any uncertainty over the funds attainable from a mortgage provider can affect the deal that is finally done. In fact, it can even cost the deal completely. But with pre-approval, the buyer can know with certainty what they can afford.
Also, in some cases, real estate agents may offer a discount if payment in full is received within a certain period of time – especially when the seller is seeking a fast sale. So payment within 10 days could mean $190,000 is paid instead of $200,000, making the actual home loan a little more affordable.
Securing Pre-Approval Mortgages
The process involved is no different to the normal process. The only difference is really timing, and a few extra fees that the mortgage provider may charge.
The applicant sends a selection of documentation to the mortgage provider for them to examine, including those relating to employment information, financial and credit status, credit history, list of liabilities and assets etc.
Successful applicants will then get a written document confirming the pre-approved mortgage including, interest rate, and the available down payment. There may be a fee to pay upfront for processing, but such a cost is worthwhile. Pre-approved home loans are more convenient after all, and the process of negotiating a property price can begin in confidence.