Inside Scoop: Home Loan Verification Process Demystified

For home loans, the LTV ratio can go as high as 80% to 90%. Thus, home loans invariably involve a substantial amount of money. Therefore, when home loan applicants apply for a loan, lenders are extra cautious about doing a proper background check to ensure they are not lending money to someone who cannot be trusted with timely repayment of loan money.

To ascertain a loan applicant’s repayment capacity, borrowers check their credit score for the credit score provides the most accurate measurement of a person’s creditworthiness. Other than this, lenders also ask borrowers to submit various documents, such as income and address proof documents, property documents, etc. Lenders verify all these documents as well as all the information provided by a borrower while deciding on whether to grant someone a loan or not.

The home loan verification process essentially involves two steps. After you submit a home loan application, lenders verify all the information provided by you in your loan application. They then ask you to submit identity, address, income and employment papers.

The information contained in these documents allows lenders to assess your repayment capacity as well as home loan eligibility. If the lender thinks that you are someone who can be trusted with timely repayment of loan money, they will ask you to submit all the property documents and thereafter will start the second phase of the home loan verification process.

During this process, your lender and their team members will check all the property papers to make sure that the property is in your name and that it has a clear title. Your lender will also send a team member to physically check the property you are planning to invest in. They do so to make sure the builder has obtained all the necessary permits and the property is being constructed in line with all the construction regulations. This is necessary to ensure that you and your lender won’t become a part of any unnecessary legal hassles at a later stage.

The home loan verification process is very important. It ensures the safety of your money as well as safeguards you against late fees and other penalties by making sure that you are applying and being awarded a loan amount that you will be able to comfortably repay without defaulting. Lenders take the home loan verification process very seriously and therefore, home loan applicants must never lie in their loan applications. Even if you have low eligibility, it is better to state things clearly and discuss your options with your lender then lie to them and later get rejected altogether.

If you are planning to apply for a home loan, we also recommend that you use a home loan eligibility calculator. This online tool lets borrowers calculate the loan amount they are eligible to apply. Applying for a loan amount that one is eligible for not only not only increases one’s chances of getting approved for a home loan quickly but also gives one high negotiating power and the ability to ask for loan terms and conditions that will ease the burden of loan repayment.