In a typical home buying transaction, you will go through both the pre-qualification and underwriting process. The pre-qualification process always precedes the full underwriting.
When you are applying for a mortgage to buy a home, start by talking to your lender and have them outline all the steps you must take in order to complete the pre-approval process.
- Many people get confused that a pre-approval letter is not the same as a full underwriting process. The pre-approval letter usually just involves a quick look at your finances to determine if you have the financial ability to purchase a home, but doesn’t include an in-depth dive into your financial history.
Once you get into the full underwriting process, the person who is buying the home will be fully vetted by examining personal finance documents, so plan to present everything from your bank statements to your tax returns.
When you decide to buy a home, it’s a good idea to get your finances in order in advance knowing that you will need to go through this process. As the borrower, you may receive a loan commitment with the final approval conditions listed. When you receive this document, pay close attention to the dates listed on it, as the timeframe in which the financial process must be completed is important and time sensitive.
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