An In-Depth Guide To Getting Pre-Approved For A Home Loan
You may have been thinking of getting your dream house, after all these years. After mulling it over for months and discussing it with your family, you have decided that it is finally time. You have a great idea of what the house and lot looks like, and you have even decided where your room will be. After all the fun parts of thinking about your would-be residential house, you are faced with the most important part: the financing of your dream home.
A luxury house with all the rooms that you can possibly want will not exactly be cheap, but the good news is that you do not have to shoulder all the expenses all at once. You do not have to acquire a huge debt or work three jobs. For people who are planning to get houses in the Philippines, a home loan is their best friend.
A housing loan can help borrowers with the bill to the house and lot for sale they want. That said, not everyone gets approved for housing loan. This may come as a heartbreak to people who already have a luxury property Philippines in mind, but just cannot avail it because they cannot make the payment without a loan. In this article, getting pre-approved for a home loan will be discussed in detail.
Just a disclaimer, though, getting pre-approved for a home loan is not the same as actually getting approved. The process of pre-approval simply lets the loan officer review your finances and credit score, before telling you about how much you can actually borrow for your dream home.
Why get pre-approved?
The pre-approval process may seem unnecessary, if it does not mean that you can actually borrow money afterwards, but it is highly important for borrowers. There are a few reasons for this.
First, if for example you are planning on getting a loan from Bangko Sentral ng Pilipinas (BSP), getting pre-approved will tell them that you have a strong intent on making a purchase with your loan. This gives you an edge over the other borrowers who are applying for loans from the same bank. The same applies with the seller of the luxury real estate. They prefer a serious buyer, so getting pre-approved might make them more open to negotiations.
Second, since you will be told around how much the loan amount will be after getting pre-approved, this will set your expectations as to which houses in the Philippines you can actually afford. This gives you an idea whether you can actually get luxury real estate with the amount, or how big the luxury house will be, among other things. This helps narrow down your choices and get you started with choosing.
With this, you can start planning money-related stuff, like huge expenses, your employment, and your business, if you have one. If the loan amount is not big enough, for example, then you can perhaps cancel an international trip you have been planning. You can also think of asking for a promotion, or ask for more tasks in the workplace, anything to get you a higher salary.
Another important upside to getting pre-approved is that the approval process for your home loan will be faster. This is because pre-approval will require you to submit some necessary documents, which will then be viewed by the the lender themselves.
Now, on to the documents that you have to prepare in getting pre-approved. First will be a valid ID. Some examples of valid IDs are the passport, driver’s license, national ID, etc. They should contain necessary information, including your birth date, your present and permanent addresses, and the fact that you are a Filipino citizen, among others.
You will also have to present a report of your credit history. This will tell the lender about your credit lines and just how reliable you are with paying your bills. Make sure you pay all of your bills on time.
Your bank statements will also have to be reviewed. Bring six months’ worth of statements with you, so they can evaluate how much your currently have and how you spend your money. Bring all the bank statements that you can bring, documents on your checking account, savings account, retirement account, and even your money market accounts, if you have them.
They will also have to know about your employment, such as your employers (both current and previous), dates started and ended, your position held in the company, and also your monthly income. Among the things that you have to bring are your pay stubs or pay slips, certificate of employment, and other income documents.
The required documents may vary depending on the borrower’s employment status. There may be more to present, for example, if the borrower is self employed or has his own business.
There also has to be a tax declaration, so bring your latest income tax returns. There are different forms for different kinds of employment, which you can check on the Bureau of Internal Revenue (BIR) website.
It is imperative, too, that you check with the lender if they have more required documents for getting pre-approved. If you plan on getting a loan from the BSP, check out the official BSP Facebook page first for more info and inquiries. The lender may also have an application form that you may have to fill out with basic information like your social security number, loan purpose, the presence of an existing housing loan, gross monthly income, contact details, and others.
Gather the loan application form and the other required documents, and then submit them to the lender. Check with the lender on how to submit. Some of them may accept online submissions, or you may just submit the documents in person.
After you submit all the necessary documents, the loan officer will then evaluate your financial situation and your credit score, by looking at your credit history, your job, your bank statements, and others.
If they deem you reliable enough for a loan, then they will send you a pre-approval letter. You will be informed on how much you can borrow. The letter may also include details like the selling price of the luxury house, the loan amount, the loan maturity, interest rate, payment terms, etc. How long it takes to get pre-approved depends on the lender.
By now you might be wondering how to increase your chances of getting pre-approved for a home loan for luxury property Philippines. There are things that can help increase your credit score, so you may want to prepare and do these ahead of time.
The first one is to have a stable job. Having a well-paying job will tell the loan officer that you have a steady source of income, so you have the capacity to actually pay the home loan for that house and lot for sale you want.
They might also look into the jobs of your family members, because they are likely to help you pay your home loan, especially if they are going to live in the same house as well. The family members should, then, be careful with their decisions regarding the next points as well, because their credit scores will also matter, especially the spouse’s.
Regarding work, you may want to ask your boss for additional tasks and salary at work, so you can raise your income, making you more trustworthy for a home loan for luxury property Philippines. Other ways include getting a part-time job or asking your family members to get a stable job.
Paying off all your debts is another important thing you should do. Having huge amounts in debts is bad for your credit score, of course. In fact, one of the reasons why people do not get preapproved is the presence of other loans that they have yet to pay for, like student loans or an existing home loan. Pay these off first before applying for another one.
Also, be careful with your credit card. Bite the urge to get new debts, so refrain from using your credit card to get another monthly subscription or to pay for unnecessary items. With these tips and ideas to keep in mind, you can have a strong credit score to get pre-approved for the house and lot for sale your family deserves.
One last thing, ask for how long the preapproval is good for, from the date of the credit report. You may have to update your credit report if you exceed the period given.
Buying houses in the Philippines may not exactly be a breeze for everyone, which is why home loans are there to help. Some people may think that they cannot afford a house, but if they get pre-approved, they may realize that they can afford a new home, after all. Also, some people might think that they can get luxury real estate and start planning, but they may not pass the pre-approval process and get disappointed.
In any case, getting pre-approved for a home loan will definitely help, so if you are planning to get a home loan soon, follow the tips in this article to help get you pre-approved.