04 January 2011
Home Loan Preapproval and Bank Procedures
Nowadays it is being seen that many buyers bring home loans preapproval letters from a bank. This assures the seller that the customer is in the position of buying the flat and has the financial capacity. Many banks give preapproval letters but this is a tedious process and this is valid only for a certain period. The buyer has to purchase a flat in the given period maybe six months after getting the letter of preapproval from the bank.
For this letter banks require a lot of information, mainly regarding finance in the family. Income tax returns of the past years have to be submitted. Your bank account statements that show your inputs and out going amounts are also cross checked with the bank in which you have an account. Salary slips of the past few months are checked for proof of salary. Even the identity proof of an individual like pan card and telephone bills for address proof also are considered. The credit card history also will come under scrutiny by the bank officers for understanding the spending habits and any cases of default.
When all the documents are scrutinized then the bank will give a document of preapproval and here the term of validity of the document s also mentioned. Mostly it is valid for six months after the preapproval date. Some banks also mention at what interest rate they are offering the loan. This is an assurance for the seller of the flat that the buyer is a serious buyer and is interested in purchasing the flat. Also since the validity of this letter is for six months the seller is also willing to negotiate on the flat rate and total amount for the serious buyer.
Though the preapproval letter is an assurance that your loan will be approved but it cannot be guaranteed and one has to always keep other options also before going in for buying a home. It is always better to have few final lists of banks and lending institutions at hand to select from. Several banks also charge a preapproval letter fee and some also mention interest rate with which the loan is being approved.