Pre-approval vs. Loan Commitment: Which One Makes Me a More Competitive Buyer?
When purchasing a home, a pre-approval and a loan commitment are both important steps in the mortgage process, but they are different.
A pre-approval is a preliminary assessment of a borrower's creditworthiness and ability to qualify for a mortgage. To obtain a pre-approval, the borrower typically provides financial and personal information to a lender, who will then review the information to determine the borrower's credit score, income, debt-to-income ratio, and other factors that could affect their ability to obtain a mortgage. A pre-approval letter provides the borrower with an estimated loan amount they are likely to qualify for and can help demonstrate to sellers that the borrower is a serious buyer.
One thing to remember is that NO…
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