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What is the key difference between a Pre-Qualification and Mortgage Underwriting?
Problem: A Pre-approval letter is typically a quick and shallow look at your financial ability to perform BECAUSE it does not represent the outcome of a full Underwriting process.
Reality: A Pre-Qualification or Pre-Approval Letter Does Not Indicate That A Full Mortgage Commitment Has Occurred! So you Are Not Truly In A Pre-qualification Process Without a lender explaining ALL of the steps.
During the full Under-Writing process, the potential buyer is vetted by a thorough review of supporting financial documents.
To summarize the key point: A buyer should never assume they are in the process of fully securing a mortgage commitment process until a lender explains the steps in the entirety. A Pre-approval letter simply means that the buyer’s personal financial capabilities are being vetted and seem to be in order at a certain purchase price level. However, a full mortgage loan commitment is not secure until all bank conditions have been met and the viability of the property as a bankable asset has been confirmed during a thorough Under-Writing process.
