Home loan pre-qualification makes sense1st Jul 2020
Buying a property is most likely the largest investment you will ever make. So, to avoid the stress of waiting for loan approval after you have signed for your dream home, get a formal indication of the home loan you can qualify for before you even start looking at houses. There is that a free web-based service that is easily available, paperless and quick.
Why pre-qualification makes sense
It may seem like a lot of trouble, but it’s worth it. Here’s why:
- You will impress the seller, who will be more likely to sell to someone who has done their homework in advance. You can use pre-arranged finances to secure the deal.
- You will be on par with a cash buyer. Face the facts: ‘cash is king,’ and a pre-qualification gives the seller a sense of security that is close to a cash buyer when multiple offers are submitted.
- You can confidently close the deal. You know your purchase power and can negotiate more assertively. If your offer is subject to still ‘finding out how much you can qualify for, the seller may select a more secure offer – even if it is for less.
- You can get things done speedily. Do all the paperwork in advance, and improve the speed of your final home loan application. The shorter your final home loan application period, the stronger your negotiation power.
- You will save thousands. Knowing your home loan prequalification amount in advance, based on your credit score and affordability, will enable you to negotiate a better interest rate, which will save you thousands of rands over the repayment period of your home loan.
- Avoid losing your dream home. This is a big one. If you find the home of your dreams, but still have to secure finance, you may see it sold to another buyer before your very eyes.
- Avoid disappointment. If you know your home loan affordability, you improve your chances for the final home loan approval. Statistically more than 75% of prequalified home loans are finally approved by the lenders, compared to less than 50% for non-prequalified buyers.
- It’s a free online service. Many lenders and mortgage originators provide a web service for an online prequalification check, but they are dependent on the applicant supplying accurate information provided. An online and paperless service is available through the My Bond Fitness process mybondfitness.co.za, which was voted ‘App of the Week’ in the Business edition of Media 24 on 13 May 2017.