What Is Mortgage Pre-Approval?
When issuing a pre-approval letter, the lender or broker reviews your salary, liquid assets, employment history, credit file, debt payments, and credit scores. They then determine the size, interest rate, and terms of the mortgage you’re likely to qualify for. A pre-qualification is done without reviewing your credit file, and therefore isn’t as accurate. Because the broker or lender is reviewing your actual credit, the pre-approval is a strong indicator that your loan will be funded. It isn’t a guarantee, but it’s a strong indicator. What Is a Good Faith Estimate? When requesting your letter, you should also request a Good Faith Estimate, which lists all of the fees that are likely to be included in your closing costs. Although not all of them are controlled by the lender, the estimate will help you compare origination and other lender costs when deciding which lender to use. When to Get a Pre-Approval Letter Most mortgage pre-approval letters are good for 60-90 days, after which time
