For many property buyers, their saving program grinds to a halt the day they get pre-approval for a mortgage
Some even begin to load up their credit cards and/or open a new line of credit to buy things for their home-to-be.
But, “pre-approval” is merely the first step in the borrowing process… It’s usually based on figures provided by the borrower, and – initially – taken at face-value by the lender. Formal approval comes later (usually when a property has been chosen and a contract signed). It’s based on the lender’s examination of the borrower’s income, credit, financial position etc. Running up additional credit, or applying for credit (to buy consumer goods for instance) isn’t a good idea. Lenders examine a prospective buyer’s financial position again before issuing formal approval – including reviewing their credit history.
If the numbers have changed significantly (salary decrease, higher card balances, new credit applications etc), the applicant may be asked to pay a higher interest rate or the lender may even decline the loan.
So here’s the point of the headline of this post:
At RealTeam, we ensure our clients have an approval letter from their lender (which is usually subject to a valuation of the property), before we begin sourcing property. This enables us to make a strong, credible offer to buy, when the ‘right’ property is identified.
