It is critical that buyers and sellers alike fully understand the mortgage loan application and approval process. This post will give you an overview of the three major steps involved. It will also provide you with an in-depth look at the four potential outcomes of underwriting, the final step in the approval process. You’ll learn what each outcome means to your buyer and how each one can impact your sale. Let’s get started!
The three key steps involved in the mortgage loan approval process are pre-qualification, pre-approval and full underwriter approval. Let’s start of by definihomeng steps one and two.
Step 1: Mortgage Loan Pre-Qualification
At this stage buyers are simply asking for an estimate of how much mortgage financing they could potentially be approved for. They haven’t yet completed a formal loan application and they are not yet qualified by a mortgage lender as a good loan candidate. As a seller, it’s usually best to steer clear of offers submitted by buyers who have only been pre-qualified and have not yet been pre-approved for a loan.
Step 2: Mortgage Loan Pre-Approval
At this stage, buyers have submitted financial information to a lender, and the lender has vetted their financial history and credit worthiness to determine how much money is safe to lend. As a seller, you can feel more confident about accepting offers from pre-approved buyers because the likelihood that they’ll be able to obtain financing is high.
Hopefully this post gave you a comprehensive understanding of the loan underwriting process and how it can impact your home sale. If you have questions, feel free to ask us in the comments!
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