an offer on a home, because it gives the seller an indication that you will be able to get financing to buy the home. It is not a guaranteed loan offer." (I.E., it clearly states that it is not a commitment to lend) The best way to make sure that the letter you have will serve its purpose is to have the loan officer explain to you and the realtor the criteria that their institution used to create the letter. More useful than either a pre-approval or a prequal is a (TBD) "Property to be Determined" commitment letter. A TBD includes all of the elements of a pre-approval and then takes it one step further. The full application package is submitted and approved by an underwriter who reviews the materials carefully to make sure everything matches the lending requirements. You will receive an actual loan commitment to lend to you before you identify a specific property that you wish to purchase.
PROCESSING: A LOAN ESTIMATE
Once you have your sights set on a property and have your pre- approval or TBD letter in hand, your next step should be to obtain a Loan Estimate (LE) from the lender. This replaced the document known as the Good Faith Estimate (GFE) which was discontinued in 2015. A Loan Estimate (LE) is a three-page form that you will receive from the lender within three business days of applying for a mortgage. The form provides important information, including the estimated interest rate, monthly payment, and total closing costs for the loan. The LE also shows the estimated costs of property taxes and insurance, and how the interest rate and payments may change in the future. It explains which charges can change before settlement (closing) and which charges must
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