Difference between a pre-approval and an approval?

Our last post discussed what a pre-approval is. We get asked all the time what the difference between a PRE-approval and a full approval is.

A pre-approval is something most people get before they start house shopping (or maybe after they've met with the realtor for the first time). It tells you basically what you can afford to purchase, which lenders/banks are interested in working with you and guarantees your interest rate for a certain period.

The approval process starts when you find THE property of your dreams and make an offer. Once an offer is made, you tell us which lender you'd like to choose (can be one from an existing pre-approval or a brand new lender if you prefer) and how you'd like your mortgage set up.

We use the specific property details, along with the details from your offer to send the application into the lender. Then we have a set time frame for the lender to make sure the price you plan to pay for the home matches the market value AND to get supporting documents in to the lender for their review and approval (e.g., income letters, paystubs, down payment confirmation, signed mortgage contract etc). We are looking for all of these items to be approved before you remove the financing condition on your offer.

You are not "locked in" to any contract with a lender until the lawyer finalizes the transaction. However, you are "locked in" to the real estate contract once all of your conditions, like financing and home inspection have been removed.

We are with you every step of the way to ensure you know what you need to do. This is always important whether you are a first time home buyer, or whether you are purchasing your 13th home!

We look forward to serving our clients! From the Bob Hanscom Mortgage Agency