Approval in principle means you are given finance approval 'in principle' (if you have fulfilled the lending criteria) prior to purchase.
This means that you:
- - are in control
- - have an indication of how much you are able to borrow
- - have a realistic budget when you are looking for a property
- - will have the confidence of submitting offers
- - can be treated as a serious buyer by agents when negotiating for the right property
When buying a home, the first place to start is to get Pre-Approved. Getting Pre-Approved for your home loan gives you the authority to place offers on properties for the amount you are Pre-Approved for or less. This is a very important step in the process and it is highly recommended, that if you are thinking about purchasing a house you get Pre-Approved first to avoid any problems and issues that could arise if you do not.
Being Pre-Approved will also let you know where you stand and will verify how much of a house you can get an home loan for. This will help you focus your attention on properties you will qualify for and most real estate agents require that you show them your Pre-Approval letter before they show properties to you.
At Addisons we educate you on how the banks evaluate your loan application in the following areas:
- - Credit: There is no minimum credit score required, and you can even have had a bankruptcy in the past. Your Loan Officer will discuss your credit situation with you. If, for any reason, your credit will not allow you to purchase a home immediately, we will tell you exactly what needs to be done in order to qualify for an home loan in the near future.
- - Income: We will discuss your current employment and income situation, and determine how much you can afford. This will prevent you from making an offer on a house that you cannot qualify to buy, or that has a monthly payment more than you are comfortable with.
- - Assets: We will discuss how much you need, and even options available if you do not have the required funds available.
Once we have discussed these items, we will work together to determine the price range that you can both get qualified for, and will be comfortable with. Once an approval is attained for that price, we will send either you or your realtor a Pre-Approval letter which will allow you to both see and make offers on houses.