What is a Mortgage Pre-Approval?

pre-approved-v-pre-qualified-1024x576-1

In order to buy a house, a large amount of money is usually required. One of the ways to get money quickly is getting a mortgage. A mortgage is a type of loan taken out to buy property or land. Financial institutions such as banks usually give out mortgages for those who are in need. The special thing about this type of loan is that the lender can add collaterals in the agreement. For example, if the client fails or is no longer able to pay the mortgage fees, the lender can retrieve the property. But don’t worry, it is rare that a client fails to pay for his/her loan and almost all customers are satisfied with their mortgage agreements.

However, before finalizing your loan from a bank, a mortgage pre-approval is required as the qualification of the contract.

A mortgage pre-approval is when a potential mortgage lender, usually a bank, looks at your financial status to find out the maximum amount they will lend you and what interest rate they will charge you.

Getting pre-approved for a mortgage is an important part of the home buying process. If you are pre-approved, it means that a lender(bank) has stated that you qualify for a mortgage loan based on the information you have provided. A mortgage pre-approval often specifies a term, interest rate and principal amount for the upcoming agreement.

At Hanabusa, Although not a required step, it is recommended to be pre-approved for a mortgage before buying a house as most people don’t have enough money to pay for the full price at once and it would be more realistic to get a loan from a reliable institution. Having a preapproval is also useful as it can give you a clearer picture of the kinds of houses you may be able to afford.