Tag Archives: preapproval for finance

What Does It Mean to Get Preapproval for a Mortgage Loan?

How to finance your property investments?

Preapproval  and the reality is for most residential real estate investments you can borrow to buy an investment property...

People interested in buying a house can often approach a lender, which check their credit history and verify their income, and can provide assurances they would be able to get a loan up to a certain amount.

This pre-approval can then help a buyer find a home, which is within their loan amount range.

Buyers can ask for a letter of preapproval from the lender, and when house hunting or shopping for a home get a possible advantage over others because they can show the seller they are more likely to be able to buy the house.

What Does It Mean to Get Preapproval for a Mortgage Loan?
What Does It Mean to Get Preapproval for a Mortgage Loan?

Often real estate agents prefer to work with a buyer which has a pre-approval as it demonstrates they are well-qualified to receive financing and are serious about buying a home.

A pre-approval is based on documentation the borrower supplies at the time of application, and any actual eligibility to receive the pre approved loan depends on terms and conditions of the pre approval and ability to secure the loan before the pre approval expires

Why get preapproval for a loan? Because you’ll be in a better position to negotiate, and understand the whole process involved before pulling the trigger.

Before starting the preapproval process, get familiar with your credit and how credit works. Review your credit reports to be sure there are no errors.

Mistakes can hold up the process and prevent you from getting the loan you deserve. Mistakes can also be fixed, but the process can take a while.

Choose a Lender: Shop around for a good lender. Check with banks, credit unions, and online lenders to see what they offer. They all cater to different borrowers, so figure out which one is the best fit for you.

A local credit union is often a good starting point, yet credit unions do not always offer the best rates.

Find out what each lender’s interest rate and fee structure would be. If you’d like to have the option of paying off the loan early (who wouldn’t?) then investigate prepayment penalties.

Finally, make sure it’ll be convenient and affordable to pay the way you want to pay — by paper check, bill pay, or electronic transfer.

Get Prepared: When you get preapproved, your choice of lender needs relevant information from you. Get information ahead of time so your application can get through the underwriting process.

Lenders want to know about your finances. You’ll need to document how much you earn (you need income to repay the loan), and it may help to show you have other assets available to you (such as cash in bank accounts).

Your lender may ask for the following items, and more:

  • Pay stubs
  • Bas statements (PAYG) instalments
  • Tax returns
  • Bank account statements
  • Other account statements

You may not need to provide copies of these documents in order to get pre-approval, and you would at least find out where they are and get familiar with them because it’s important that anything you say on an application is accurate.

You may also have to provide information about the thing you’re buying. If it’s a house, is it a family residence, or is it a n apartment, townhouse or unit in a building with 50 units?

The more detail you…the better because your lender’s offer may change depending on what you want to buy.

Apply for the Loan: Once you’ve picked a lender and prepared yourself, it’s time to apply. There’s only one way to find out how much you can get so go ahead and fill out an application to wait for an answer.

An offer may come quickly, or it may take a while. Lenders do a quick once-over when you get preapproved, so you should have an answer within one day.

Be aware some lenders claim to preapprove you without really looking at your finances. If they don’t run your credit or ask about your income, it’s not a good sign.

You want a preapproval that actually means something, and lenders can only make a realistic offer if they know something about you. If you get a fake or not a genuine preapproval, you may later find out you can’t really borrow as much as you hoped.

Preapproval

How to Avoid Costly Mistakes Buying Investment Property?

WOW! Are you thinking this is an exciting time to be a real estate investor and buying investment property?

 

Buying investment property…did you get the raw end of the deal when you’re buying investment property? There are so many steps where factors can go wrong in the buying process. Steps you may be aware, others you may not even see coming until it’s too late…

Property investors usually learn the hard way by trial and error throughout their property investment journey, and of course this more often than not results in poor decision in context to investments underperforming and a lot of lost time, money and energy.

What if you’re prepared to mitigate risks in the first place? Buying investment property, wouldn’t you want to be armed with as much knowledge as practical to avoid pitfalls?

buying investment property
Buying investment property with a focus on successful investment properties in highly sought-after locations

Here are some of the most common buying investment property mistakes encountered by property buyers:

Paying too much because you didn’t what you wanted and how to effectively negotiate. Did you know nine times out of ten, a third party negotiator would be able to achieve lower price and better deal than if the buyer was to go it alone?

There’s so many buying investment property factors which come into play as you’re negotiating a property purchase, it’s often the hidden motivations and emotional process which brings buyers unstuck.

Rushing in and signing the contract…guilty of this in the past? Are you not clear on your goals and expectations? Under pressure or are resources thin? Maybe the sales agent claimed you’d miss out if you stalled?

Would you know what to look for in a contract to ensure you were fully protected legally? Too many buyers jump in and sign contracts too soon before understanding the deal and reviewing all the details.

When buying investment property, are you leaving yourself exposed and wide open? Don’t be fooled by the so called cooling off period because penalties still apply if you change your mind under this clause and of course, the consequences of this mistake will cost you.

Buying investment property, in fact have you bought the wrong type of investment property? Ever left decisions to the last minute because you’re unorganised, busy or unexpected emergencies took your time?

If you rush into making decision you’re bound to overlook and make devastating mistakes, right? Why would you want to get stuck with an investment property you didn’t want because you had to make a fast decision?

buying an investment property with equity
Buying investment property with equity

Buying investment property can be divided into two simple steps:

  1. Allow adequate time
  2. Do your research

In your contract, buying investment property check list, always make sure you allow for building inspection and pest report. If it’s written into the contract, make sure you’ve booked your building inspector, allowing enough time to thoroughly review the report and negotiate the findings?

Did the real estate agent recommend someone or did you find a building inspector independent of their suggestion? Its always a professional courtesy to take on recommendations, however some agents form strategic alliances with inspectors to get sales through.

Buying investment property and running out of time for finance? Losing the property because bank needs more time or contract date has expired, vendor terminates contract and real estate agent sells it to someone else… property lost and you’re back to square one.

Buying investment property in this scenario happens more often than you’d think, however the situation can be avoided with closer attention to how finance is arranged prior to buying investment property, right?

Buying Investment Property

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