Why Get a Pre-Approved Home Loan First

If you're buying your first home, you can be forgiven if you're a little more than excited about it. It's one of the biggest purchases you'll make in your entire life, after all. Aside from that, your new home will also be where you will build your future in the next 20-30 years or so. However, don't commit the same mistake that other first time buyers have done before you. Instead of choosing a home first, you need to get your loan pre-approved before anything else. We'll share with you the reasons why later in this article, but before that, we'll talk about what a pre-approved loan is.

Pre-Approved Loans 101

What a pre-approval does is show you how much you can borrow and how much your repayments will be. This is a lot more accurate than loan calculators and other forms of estimates since it takes into full account your finances. With that out of the way, let's move on to the reasons why you need to be pre-approved first. Here they are:

  1. It saves you time and money. Let's say that you already found the house of your dreams. But there's just one catch: you can't afford it, or at least your lender isn't willing to hand out a big loan to you. It's embarrassing and frustrating. Aside from that, it took a lot of time for you to find that property, a property you apparently can't afford. However, if you're pre-approved, you'll know exactly how much you can spend on your home. This saves you time since you can narrow down your choices immediately. It also saves you money (you waste little gas too).
  2. You can bid with confidence. Auctions are one of the ways you could find that elusive property. By being pre-approved, you'll be able to join auctions and bid with confidence since you know how much you can spend. Otherwise, you're only opening up yourself to a nasty surprise like number 1: you'll end up with a property you can't afford.

As a soldier never goes to war without his rifle (or a tank or an airplane), so you should not pick a property without getting a pre-approved loan first. Speaking of preparedness, take the first step towards it today with Rate Detective. Our professional advisors are ready to help you find the best loan for you and even show you rate comparisons of the top lenders based on your personal circumstances. Contact us today!

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Published on November 11-th, 2012 in Home Loans
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.

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