Tips for Getting Pre-Approved for a Mortgage

Get pre-approved for a mortgage It’s usually a cause for celebration for customers looking for an easy loan.

This is because the pre-approval notification indicates that the first steps of applying for credit were successful. But, is it possible to increase the chances of achieving it?

Today we will talk about this topic, so that you can understand what pre-approval is and how to increase your chances of passing this stage of the application process. Continue reading and check it out!

Approval and pre-approval: understand the difference

Before you learn how to increase your chances of getting pre-approved for a mortgage, it’s important that you understand what this means.

This is because many believe that the pre-approval notification indicates that the credit has already been released, but this is not the case. After all, what does pre-approval mean?

As the name suggests, pre-approval is the initial stage of the credit analysis period.

In general, at this stage the bank evaluates your basic data, as it does not yet have authorization to carry out an in-depth inquiry into your credit profile.

Approval occurs when all analyzes have been carried out, and the bank is therefore certain that it is safe to provide credit to the customer.

So, basically pre-approval is the initial stage of the process, while approval is the final stage, being an indication of success in the credit application.

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How do I get pre-approved for a mortgage?

At this point you understand that when it comes to credit, getting pre-approval is important, but what really matters is the final approval.

However, the fact is that without pre-approval there is no approval, so let’s now look at how to get pre-approved for a mortgage.

In general, as it is an initial phase, it is recommended that the customer contact the bank and begin the mortgage application procedure.

To ensure success in pre-approval, it is essential to have a good credit profile, in addition to taking documentation of the property that will be offered to the bank as collateral.

Furthermore, we recommend that you make the request with a bank that already has an account, as this way the chances of obtaining pre-approval are greater, since your data is already in the company’s database.

My mortgage was denied despite pre-approval, what should I do?

It is quite common for a customer to receive a pre-approval notification for a mortgage, and when the procedure continues, they end up being denied credit. Why does it happen?

As we explained previously, a pre-approval is an initial step, carried out when the bank does not yet have all the data necessary to complete the analysis of the credit application.

Therefore, if the data evaluated in the following steps does not provide security to the bank, the mortgage application may be denied.

In this case, there is no irregularity on the part of the bank, as pre-approval is not a guarantee of granting the credit.

To resolve the situation, you have the option of trying a new analysis request, or seeking an agreement with another financial institution.

Check out tips to increase your chances of approval for a mortgage

Experiencing problems getting approved for a mortgage is not a rare situation, so if it’s happening to you, don’t worry.

At this point, the ideal is that you pay attention to some secrets to obtain pre-approval for a mortgage, and thus increase the chances of final approval.

See below 3 fundamental tips:

1. Avoid listing financed properties that are not yet paid off 

Some financial institutions allow customers to nominate properties that are not yet paid off for mortgage, although this is not so common.

The big problem with this proposal is that it is usually much more difficult to obtain pre-approval for a mortgage in the case of a property with outstanding installments.

Therefore, prioritize indicating properties that have already been paid for and that are in the name of the applicant, as this way the chances are much greater.

2. Give priority to a bank where you already have an account 

Most banks take a customer’s history into account when granting credit, and this also applies to mortgage applications.

Customers with a positive history are much more likely to obtain pre-approval for a mortgage, as their details are already known to the bank.

Therefore, prioritize placing the order at institutions where you have a current account with good transactions for a certain period of time.

3. Pay attention to the amount requested in the mortgage

Banks define a safety margin for the value of the mortgage, so trying to request credit equal to or greater than the market value of the property is not a good idea.

This is because, the higher the amount requested, the greater the risks to the bank, so the chances of obtaining pre-approval for a mortgage become lower.

Therefore, we recommend that you be reasonable in your request, and try to request a credit amount between 30% and 50% of the value of the property.

Read too: How to Reduce Your Student Loan Costs – valuedyou.com.