Buying a Home in Israelthe English guide

Getting Mortgage Approval

The Israeli Approval System

(The Requirement of Pre-approval, Contrasted to the American System) Pre-approval is called אישור עקרוני (“ishur ekroni”), and is based on facts provided to the bank.  The preapproval will show the rates the bank is willing to provide the mortgage at, as well as other loan terms. These rates are valid for 24 days, after which the rates can fluctuate, depending on the market and/or other conditions. The floating rate part of the rate updates on the 10th of the month. The preapproval itself is valid for 3 months.

Why Pre-Approval is Crucial

Pre-approval shows sellers and agents that indeed you are ready to purchase a home. It gives buyers confidence as well, giving you knowledge of the terms of the loans you will most likely be getting. Many agents actually require a pre-approval prior to any house viewings. It gives buyers a realistic idea of what the monthly payments will be and what working budget they have with regards to the purchase price of the home.

How To Get Pre-Approved

A mortgage broker will represent you to all the major banks. A good mortgage broker will know how to shop around and navigate your needs in the market. Without a mortgage broker, a buyer must contact each individual bank’s mortgage customer service line and schedule an appointment with a loan officer (יועץ משכנתאות). These are often new and inexperienced agents who answer the phone/emails, and won’t be able to secure for you the best rates, let alone know how to tailor your mortgage to your individual needs. It makes negotiating very difficult as you have to start at the bottom at each bank. Experienced brokers already have contacts they work with on a regular basis and can get you to the front of the line, in the VIP section, as it were.

What the Bank Will Review

The four main criteria that banks review when assessing your mortgage rates are the buyers’ assets, income, credit rating and the loan amount LTV (loan to value), i.e. the value of the home versus the loan and down payment. A higher down payment percentage means more competitive rates. Malchi Mortgages specializes in ensuring you are represented to the bank in the best way, to secure the most attractive pre-approval rates, allowing you the most flexibility and budget when deciding on your home in Israel. An experienced mortgage broker wil factor in the total mortgage cost, monthly payments, interest rates and loan period in order to design for you the perfect loan, factoring in potential future interest rate fluctuations and other market conditions worth considering.

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