Should you get pre-qualified for a home loan

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Once you have decided that it is indeed time to start looking at a home you can purchase, it is also time to start getting your ducks in a row – what is your budget, where do you want to live, what type of house do you want to invest in. Your answers to these questions will greatly influence the houses that you end up viewing, but one of the most important things you can do that will give you the best guidance, is getting pre-qualified for a home loan.


Why get pre-qualified

When you start looking at properties, you need to have both feet on the ground and realistic expectations. It is lovely to look at large homes with sprawling yards, and these properties might be within your budget, but if they are not, it is best to be aware of that from the start and start a serious property search in your price range. Getting pre-qualified for a home loan is a great way to help you do that as it is a very good indication of your bond amount, interest rate, and monthly instalment. The final bond might look slightly different as the bank will still factor in its property evaluation and the signed offer, but chances are that the final bond won’t be far off.


A certificate stating that you are pre-qualified for a home loan has some additional benefits too. Firstly, it shows to your agent and the potential home seller that you are a serious buyer with the appropriate financial capabilities to purchase the property. Home sales can become lengthy processes, especially when sales fall through at the last hurdle. Being pre-qualified indicates that something like that is far less likely to happen with you as a buyer.


When you receive a certificate that you have been pre-qualified, you will also receive your credit score. This score is very important for the banks. It indicates your risk level, and the banks will use it when they decide to give you a home loan or not. If you do see that you have a poor credit score, you can check your credit details and start working on improving it.


How to get pre-qualified

Homebuyers have several options available to them to get pre-qualified.

  • The bank

You could choose to go straight to your bank and get pre-qualified with them. They will evaluate your current relationship with them and determine what type of loan they can provide. The bank will provide you with just one source for a home loan, and it might be better for you to shop around for better rates.

  • Bond originators

Bond originators will help you procure a bond (in this case a pre-qualification). They will also shop around for you with the aim of getting the best home loan you qualify for. You can then compare offers and choose the best rates, terms, and loan amounts. Bond originators don’t have a personal relationship with you as a client, which the bank (possibly) does. If this is an important consideration for you, you might prefer sticking with your current bank as your lender.

  • Online

You could also take the entire process online and not deal with people. Chances are that the process will still be done by a bond originator, but inline home loan comparative services will also apply with a number of partner banks for you and let you compare the results – no need to talk to anyone.


Final thoughts

At Karis, we would urge you to get pre-qualified for your home loan. It sets you on the right path while searching for a home so that when you do fall in love with a property, you will be able to make an offer and get the house of your dreams.

We look forward to helping you find that dream home and make your entire home buying/selling experience as pleasant as possible.