The term pre-approval is used to indicate that a prospective buyer has completed a loan application with a lending agency or bank. They have provided documentation regarding their income, savings and debt which an underwriter has reviewed.
A pre-approval is typically done by a lender for a certain loan amount while making a speculation about what the interest rate will be at the time the loan will be made. It also accounts for estimates of what will be paid for property taxes and insurance by the borrower. Once a property is chosen for purchase, approval must also meet the underwriting guidelines of the specific lender.
McKinney Realty, LLC recommends that buyers get pre-approved through a local lender as you begin your search for a home. A lender can give you a better idea as to what homes you can afford, and a pre-approval letter will be to your advantage when negotiating the purchase of your new home.
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