When you are in the process of qualifying for a mortgage loan by mortgage lenders Dallas for your new home, you might come across certain terms such as ‘conditional approval’ and ‘pre-approval’, and it’s quite normal to not understand what these terms mean. However, when it comes to financing your new home. It is imperative to know what these terms actually mean, and their differences.
We have you all sorted in this article. Today, we are going to tell you what conditional approval and pre-approval really are:
Pre-Approval
In simple words, preapproval is based on what the mortgage borrowers tell the banker or mortgage loan lenders about specific financial and credit report information.
Or just by filling out a loan mortgage form. You might be expected to provide a few financial details. Or documentation in order to calculate the loan you can expect to borrow.
Conditional Approval
Conditional Approval, which is also commonly referred to as up-front underwriting. Is basically the next step of a pre-approval mortgage loan.
Conditionals approval comes after pre-approval and goes through every detail more thoroughly. You can expect a loan underwriter to strictly review all the documentation. You have provided before you are finally approved for the mortgage home loan.
Here, the mortgage lender will review everything more thoroughly. In order to make sure that every detail matches with the documentation review. When you are finally offered the letter of pre-approval, you will have certain conditions for the final approval of this loan.
Some of those conditions might include:
Additional documentation
This is a necessary step in order to ensure the mortgage lender. That you have the same financial conditions as you did at the start of the loan. And that your debt to income ratio hasn’t changed drastically either.
So, what do these additional documents include? In most standard cases, you will be required to provide your latest bank statement, payslips, tax returns, utility bills, pay stubs, assets statements. Credit card history, w-2s, and so on.
You must sell your current home first
In most cases, mortgage borrowers will be expected to sell their current home and close the existing mortgage, in order to be approved for a new mortgage loan they need for their new home.
Appraiser’s report
An appraiser will be sent to your location in order to carry out an entire valuation on your new home. If the price of the new home is right.
No liens or judgments
It is also imperative that your home does not have any liens or judgments on it. This is because most mortgage lenders would not want to give a loan to a house that has liens or judgments. As it becomes riskier for them to lend loans.
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This gives customers greater flexibility and choice when it comes to borrowing money.