Should you get your home mortgage finance pre-approved before you go hunting for a home to buy?
The boy scout motto of “be prepared” applies to most things in life, especially our finances. So knowing what a Home Loan Mortgage Lender is prepared to lend you to buy your home or investment property is a must.
Most competent Mortgage Brokers will have a calculator to help you work out what you can affordably borrow. Some will even offer a pre approval. What does pre approval mean? In some cases nothing, it will just be a ploy to get you to deal with the broker, so that when you get serious about getting a house and a loan you will choose them, these guys will generally overstate the amount you can borrow. In other cases it will be a written undertaking from a mortgage lender stating an amount they are prepared to lend you based on your proven financial information. The written undertaking is the best option.
Once you have your written pre approval you will pretty much know how much you can spend so it will make buying a home pretty easy. Make sure you get an itemised list of all the loan costs involved with the home loan with your pre approval letter. Including: up front and delayed application fees, ongoing fees and charges, legal fees, documentation fees, valuation fees, cheque fees, total loan stamp duty’s if applicable, mortgage insurance, discharge fees, early termination fees, missed payment and arrears fees get them all. A good thing to ask for is a copy of typical “mortgage offer document” from your broker, this should have everything disclosed so you can ask the relevant questions, with the aim of becoming well informed.
With your home loan pre-approval in your hand you can confidently head off to the open inspections and auctions. Your job now is to get the best property you can within your budget. Happy home hunting.