With rising competition in the home loan industry, lenders are doing all they can to increase the speed of their processes. Parallel to this, lending institutions increasingly rely on legal verification to ensure the security of their customers. This ensures that the loan documents and the borrower’s identity are in order before the loan is approved. This is why legal verification is essential in getting a loan approved quickly.
Legal verification is an important part of the home loan process, and here's why
First, it is an important part of a lender's due diligence before approving a loan. Legal verification helps a lender make sure that the seller has the legal right to sell the particular property. This includes confirming that the seller owns the title to the property, that there are no outstanding claims on the property by another individual, and that there are no legal restrictions forbidding the sale.
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Second, legal verification helps prevent fraud in the home loan process. A lender can ensure that a borrower is not trying to commit mortgage fraud by checking records. For example, legal verification helps a lender make sure that the borrower is not providing false financial information to qualify for a loan.
Finally, legal verification can also help reduce the amount of time it takes to process a loan. When a lender verifies the borrower's legal rights to the property, it can save time by decreasing the amount of paperwork needed.
It does raise several questions - why are these aspects of the home loan process so vital? What role do they play in obtaining a home loan? Learn how legal verification processes simplify the process of obtaining a home loan.
The process is faster, which saves time
One of the primary benefits of legal verification is that it helps to speed up the home loan application process. By verifying key information upfront, lenders can approve or deny applicants more quickly, which saves both time and money. Time savings are especially beneficial to homebuyers because it eliminates the possibility that the necessary paperwork will run late, leading to delays in securing the loan.
Moreover, when availing of properties, borrowers can choose properties developed by bank-approved developers, as specified in the previous point. This saves precious time for both lenders and borrowers.
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Reduces discrepancies
Legal verification is the process of verifying the accuracy and truthfulness of provided legal documents. This verification process simplifies the home loan process by reducing discrepancies and assuring the lender that the documents they are receiving are accurate. It ensures that the loan officer knows that the borrower has answered all the questions being asked regarding their financial and identity information.
Thus, it helps in speeding up the entire process of loan processing as it reduces the number of discrepancies that might arise during the processing. All the documents are carefully checked and reviewed before they are submitted to the lender.
Valuation of the property
Technical verification helps provide a clear picture of the state of the property. This further comes in handy when valuing the property- the borrowers can be sure that post a well-conducted verification process, they are getting their money’s worth through the loan.
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Borrowers’ convenience
Oftentimes, banks collaborate with builders for projects. The legal Verification process has usually already been carried out in such collaborations. This proves to be extremely convenient for borrowers since they can skip these tenuous verifications. They will only have to provide documents to attest their creditworthiness.
Identifying potential red flags and roadblocks
The legal and technical verification processes provide both the borrower and the home loan institution with the necessary information to process the loan. This includes all the potential cracks in the foundation- any red flags in the documents or the property will be highlighted during verification. This can help both parties avoid serious consequences that may crop up further on. Additionally, it helps the process move smoothly and quickly.
Conclusion
Getting the green light from the legal and technical processes is very important. Although it is a common misconception that the legal verification process makes the property loan process trickier and slower, it simplifies the load on both parties involved. Lending institutions often outsource the verification processes to third parties of professional firms and lawyers. Ultimately, legal verification smoothens the path to obtaining approval for the loan.
Atul Monga is the co-founder and CEO of BASIC Home Loan.
