Is
pre-approval a general endorsement by a bank?
No,
when you are pre-approved, it is for a specific loan program
from a specific lender. Not all lenders offer all loan programs.
You may need to get approved with a different lender or
for a different loan program with the same lender, depending
on your financing options at the time you buy a house. Check
with the agent or broker who helped you gain loan pre-approval
before you write an offer. If you think you will need to
get re-approved for a loan, make sure to allow enough time
for this in the purchase contract.
Is
the pre-qualification a guarantee that I will get the loan?
No.
The lender or mortgage broker is under no obligation to
grant you a loan. Most pre-qualification letters state that
a buyer appears to be qualified for a certain loan amount.
There is usually a disclaimer to protect the lender or broker
in case you fail to qualify. Before a lender will actually
loan money, you must complete a loan application.
Is
there anything official about a pre-qualification?
No,
loan pre-qualification is an informal process. After a review
of your financial status, a loan agent or broker will issue
a letter stating that if the information provided is accurate
you should be able to qualify for a loan of a certain amount.
Often, these letters are form letters. Even if a pre-qualification
letter is personalized, it usually contains disclaimers
to protect the loan agent. Consequently, some real estate
agents feel that pre-qualification letters are worth little
more than the paper they're written on.
