When Should a Homebuyer Opt For a Pre-Approved Home Loan?

When it comes to buying a home, financing turns out to be a huge concern for every

buyer. It’s a decision that affects your financial balance and requires meticulous planning. However, with banks offering a pre-approved home loan for prospective buyers, the process of home buying seems like a breeze. What’s a pre-approved loan? A pre-approved home loan lets you know the amount of loan you’ll be eligible for when you finalise a property you are interested in investing. Once you have an idea of the amount you are eligible for, you can budget and plan your finances in an appropriate manner. What’s the process for a pre-approved home loan? Barring property documents, the process for getting a pre-approved home loan is similar to the one undertaken for a regular home loan. Documents required: Your income tax returns PAN card Address proof Bank account statement Salary slips Based on your financial background and credit history (CIBIL score), a lending institution determines if you are eligible for a pre-approved loan. The lending body decides upon the final loan approval limit after subtracting the amount of any existing loan(s) taken by the applicant. Though a processing fee is also charged during the exercise, the same is adjusted when the loan is disbursed. Post the completion of the necessary formalities, banks provide a buyer with an approval letter that mentions the amount that’s been sanctioned to the applicant. While it varies from one lending institution to another, at most, this letter is valid for six months, after which one has to undergo the whole exercise again. Not only that, you need to pay the processing fee again as the fee of the previous pre-approved loan application isn’t adjusted during the new process.