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Does Loan Pre-Approval Letter Guarantee you a mortgage?

Some of you out there looking for mortgages in Tampa Bay must be wondering whether or not a pre-approval letter guarantees you a mortgage. The short answer to this question is no. A pre-approval letter doesn’t guarantee you a mortgage. It simply gives you a chance of getting a mortgage. What is more important is how the underwriting process goes and you won’t get till this stage until you are under contract and after inspection/appraisal stage. 

Misunderstandings clarified

Pre-approval letters are both extremely popular as well as extremely misunderstood term amongst people looking for mortgages in Tampa Bay. One common misunderstanding around the topic is that pre-approval letters guarantee you a closing. However, that is not how it works. Pre-approval letters are preliminary reviews, measuring the qualifications of a borrower, helping determine what amount they may have the ability to borrow. If you have received a pre-approval letter, peruse it carefully, and you will discover an abundance of disclaimers running along these lines.

But that is not to say that pre-approval letters aren’t helpful for homebuyers. They increase one’s competitivity in the market, increasing the willingness of real estate agents to work with one, making sellers take one more seriously, securing one immediate advantage over those buyers who do not possess pre-approval letters. The only thing they don’t do is guarantee you a loan. They do not signify a commitment.

Read here about why it’s a good idea to be pre-approved before you start looking for houses. 

Some things you should know

The pre-approval process involves mortgage lenders examining your financial position, determining whether or not you qualify for a home loan, basing this determination on their own qualification criteria, qualification criteria that includes the likelihood of your continued employment, your employment position, your income, the debt you currently owe as well as the credit score. These are the main ways in which they measure your eligibility.

You will receive pre-approval from a lender for a certain amount when it comes to a home loan, helping you narrow down your search for housing, saving you energy and time, providing you with a price range that is realistic, basing this price range on a variety of factors, including your present level of income, your debt, and so on.

The reason that the prefix ‘pre’ is attached to ‘preapproval’ is that the process of acquiring a preapproval letter happens at the very beginning of the process of buying a home, before the hunting for houses, offers and negotiating processes. Pre-approval is a preliminary process, happening well before underwriting. In this way it is distinguished from final approval, that happens once the underwriting process is completed.

A preapproval does not signify a commitment guaranteeing that you will be lent money. It is a lender asserting that it is likely that they will approve you for a given amount, only if you clear the process of underwriting, fulfilling all of its requirements.

In order to gauge your debt to income ratio and your risk level as a borrower, the lender, in all likelihood, will request a wide array of financial documents from you, including pay stubs, tax returns and bank statements etc. 

If you want more assurance in getting your mortgage closed, apply with the mortgage banker who goes to go extra mile to get through all of your documents and do thorough check on your financial position. 

Apply here to get a real pre-approval letter from the mortgage banker who has 100% closing rate. 

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