instrument. The pre-approval is a very strong indicator that the borrower will be approved as long as their key information does not change before its time to close the loan. According to the Consumer Financial Protection Bureau (CFPB) “Prequalification and preapproval both refer to a letter from a lender that specifies how much the lender is willing to lend to you, up to a certain amount and based on certain assumptions. These letters provide useful information but are not guaranteed loan offers" "There’s not a lot of difference between a prequalification letter and a preapproval letter. While there are some legal distinctions, in practice both terms refer to a letter from a lender that says the lender is generally willing to lend to you, up to a certain amount and based on certain assumptions. This letter helps you to make an offer on a home, because it gives the seller confidence that you will be able to get financing to buy the home. It is not a guaranteed loan offer." "Don’t worry about which word lenders use. Some lenders may use the word “prequalification”, while other lenders may call the letter a “preapproval”. In reality, lenders’ processes vary widely, and the words they use don’t tell you much about a particular lender’s process. The important thing is that the letter you receive provides enough information for sellers in your area to take it seriously.” 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. A (TBD) "Property to be Determined" commitment letter however includes all of the elements of a pre-approval and then takes it one step further. The full application package is submitted to an underwriter who reviews the materials carefully
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