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Pre-Approval Versus Conditional Approval

By
Real Estate Agent with RE/MAX Space Center

Pre-Approval Versus Conditional Approval

A pre-approval letter is a great way to start your home search. Having a pre-approval letter when making an offer on a home makes your offer more attractive to sellers. But beware a pre-approval letter does not automatically guarantee that you will be granted a loan. The information must be verified by underwriting before a loan can be issued.

Underwriters provide conditional approvals once they have verified all financial and credit information and have determined that you are a good risk for the lender. The conditional approval will stand unless you fail to meet the stipulations the lender lays out.

Some of the most common conditions require you to provide additional paperwork such as paycheck stubs, bank statements, etc. On a contract you are allowed a certain amount of days to get your loan in order or you as the buyer may have to for fit your earnest money. Earnest Money is a deposit made to a seller showing the buyer's good faith in a transaction. Often used in real estate transactions, earnest money allows the buyer additional time when seeking financing. If you are unable to get financing in order to due to a credit issue, then you run the risk of losing your earnest money to the sellers. You must remember the sellers took their home off the market in thoughts that your loan would go through.

Conditional mortgage approvals require an inspection and appraisal of the property to verify the market price of the home and determine the loan-to-value ratio. The lender will also require title verification to confirm ownership of the property and determine if any liens or judgments exist on the house. If you already own a home, the lender may require that you sell it before it will approve the new loan.

So when it comes to actually getting a loan for your new home, having a pre-approval letter does not mean you are guaranteed a loan. There are certain conditions that must be met and verified before lenders will accept. If you are confused about the process it is best to speak to your Realtor and he/she can help with any questions you may have.

Learn more about the Pre-Qualifiaction Process

 

 

If you are thinking about selling your home in the League City or surrounding areas and would like a FREE Market Report, give me a call today! I would love to help! I can also help you find your next home! 713-542-8451

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