What's the Difference Between Mortgage Pre-approval and Mortgage Approval?
Mortgage pre-approval and approval are two stages in the process of obtaining a mortgage to purchase a home. They serve different purposes and have distinct characteristics.
Pre-approval is an initial step in the mortgage application process. It involves providing your financial information to a lender, who then evaluates your creditworthiness and financial situation to determine how much money they are willing to lend you.
Pre-approval is not a binding commitment from the lender to provide you with a mortgage. It's more like a conditional offer, and it's typically valid for a limited time, often around 60 to 90 days.
To get pre-approved, you'll typically need to provide information about your income, employment, credit history, and other financial details. The lender may issue a pre-approval letter that you can use when making an offer on a home. This letter gives you an idea of your budget and can make you a more attractive buyer to sellers.
Pre-approval doesn't involve a thorough underwriting process or a property appraisal. It's based on the information you provide and a preliminary credit check.
Mortgage approval is the final step in the mortgage application process. It occurs after you've submitted a full mortgage application, and the lender has conducted a more comprehensive review of your financial situation and the property you intend to purchase.
During the mortgage approval process, the lender will verify all the information you provided during pre-approval and conduct a thorough underwriting review, which may include verifying your employment, income, credit history and the appraisal of the property you're buying.
Mortgage approval is a binding commitment from the lender to provide you with a specific mortgage under certain terms and conditions. Once approved, you'll receive a mortgage commitment letter, which outlines the terms of the loan, including the interest rate, loan amount and any conditions that need to be met before closing on the home.
Mortgage approval is the final step before closing on the property, and it's a critical stage in the home-buying process.
In summary, pre-approval is an initial assessment of your eligibility and the amount you can potentially borrow, while mortgage approval is the final step, where the lender conducts a comprehensive review and commits to providing you with a mortgage under specific terms. It's important to note that both mortgage pre-approval and mortgage approval are subject to the information provided and can be affected by changes in your financial situation or the property's condition.
Looking for more resources on buying a home? Look no further! Click here to read about the First-Time Homebuyer Programs in Edmonton.