There are two types of mortgage approval. Pre-approval, also known as a conditional approval, is the first type. Formal approval, also known as unconditional approval, is the second type. Both are essential parts of the mortgage process, and with both, lenders have ways of informing you of approval.
Pre-Approval
This is the first step to loan approval. It is important to note that not all lenders have this step. Conditional approval usually occurs when a loan application is either not filled out all the way or not all the necessary financial documentation has been submitted. Without all the required documents or a completed application, a bank cannot formally approve your loan. However, they may call you to say your loan has been ?conditionally approved. Usually, you can start looking for homes, but you should not purchase a home until you get the go-ahead from your bank.
Formal Approval
This is the approval you want. This approval means the bank has formally approved your loan. You can purchase a home without waiting. Formal permission occurs after your lender assesses all of your completed paperwork, including a signed loan application and financial documents. You know you’ve received formal approval when you receive a certified letter from your lender stating the details of the loan and a loan contract.
If you are looking to purchase a home, contact the experts at Mortgage House. We are a non-bank lender who can approve loans faster than our competitors. In addition, we can find the loans with the best terms to save you money on interest repayments.
