FAQs About Mortgage Preapprovals
Avenue 3: FAQs About Mortgage Preapprovals
Do I have to get a mortgage preapproval?
The short answer is yes. Getting a mortgage preapproval has become a necessity. Every buyer making an offer with a mortgage contingency will be asked to provide a mortgage preapproval to the seller in order to bolster the seller’s confidence in the buyer’s ability to obtain the necessary financing.
If I am preapproved by a bank, do I have to get my mortgage with them?
The short answer is no. Getting a preapproval does not obligate you to work with the bank giving you the preapproval.
Do I need a preapproval from more than one bank?
No. A preapproval from one bank is sufficient.
What does the bank need in order to provide a preapproval?
The bank will need to review your credit and your assets – personal savings accounts, retirement accounts etc. Many banks will verify employment as well.
Does the preapproval expire?
No, the preapproval does not technically expire, but, if the bank has not verified your financial information in say, a few months or more, they may want to revalidate the information. Or, if your letter has a date of issue that is far in the past, the seller may ask that you update the preapproval.
When do I need to present the seller with the preapproval?
Sellers will anticipate a copy of a preapproval letter in conjunction with the offer to purchase.
Are preapprovals all the same?
Yes and No. The intent of the preapproval is the same from every institution. However, the wording of the letter may vary. Some banks provide a letter which specifies the property address and purchase amount each time an offer is made, a new letter is issued. Other banks will provide a more generic letter indicating the highest mortgage amount for which the buyer qualifies.
Is a preapproval a guarantee of a mortgage?
No. While a preapproval goes a long way toward qualifying you as a buyer, there is still more information the bank will need at the time of the actual application. In addition, the property itself must meet the bank's criteria as a mortgageable asset - meeting the guidelines that the particular bank has set for approved lending. The property will also be subject to appraisal by the bank.
Take a look at the Avenue 3 Service Providers page for the names of some of the Mortgage Consultants in the area that are ready to answer any of your questions regarding lending practices.