What’s a pre-approval?

Also known as a commitment to lend, a pre-approval is our promise to give you a loan based on certain terms and conditions. From pre-qualification to closing, we’re here to help make your mortgage process as smooth as possible. We’ve provided the answers to the five questions we get asked most about pre-approval letters, including what’s in a pre-approval letter, how long it takes to get one and when it expires.

As part of the pre-approval process, you’ll be asked to provide documentation. During this level of approval, your actual documentation is sent to processing, which allows your lender to provide you with a maximum loan amount. With this, you can confidently start shopping for your home. You’ll receive pre-approval in the form of a written and signed letter. Sometimes known as a mortgage commitment letter, a pre-approval letter usually includes the following:

• Your name and your lender’s name
• Type of loan program, such as Conventional, FHA, USDA or VA
• Maximum loan amount
• Minimum down payment
• Loan term
• Loan interest rate
• Total estimated monthly payment
• Terms and conditions of the loan

After gathering some basic financial information, getting pre-qualified for a mortgage only takes a few minutes. The pre-qualification level of approval is meant to help you decide if you’d like to move forward with your home loan application. Unlike pre-qualification, getting a pre-approval letter is a formal process that involves submitting supporting documents to your loan officer or applying online. The length of time that it takes to get a pre-approval letter varies.

Most loan pre-approval letters include conditions, so there’s no need to be concerned if yours does too. Common conditions include a property appraisal to assess your property’s fair market value, proof of homeowners insurance coverage and flood insurance if your property is in a flood zone.

Once you have a pre-approval letter, you can shop for a house more confidently. In a competitive market, it can be valuable to show sellers that you’re pre-approved to buy.

When you receive your letter, you’ll notice it’s good for a certain period of time. Be sure to work with your real estate agent to set your closing date before your pre-approval expiration date. How long a pre-approval letter is good for depends on your situation. Your experienced Guild loan officer can clarify your pre-approval length and review what will happen if your closing date occurs too late.

Guild’s Credit Approval Protection* program can also give your bid a boost because it gives added confidence in Guild’s pre-approval process. If Guild issues a preliminary underwriting credit approval and is then unable to close on the borrower’s loan, Guild will pay the borrower up to $1,000 for inspections, appraisals and relocation expenses incurred. Guild will also reimburse the borrower for their lost earnest money deposit, up to $5,000.

From pre-approval to closing, Guild Mortgage advisors are here to guide you through your homebuying journey. Connect with an experienced loan officer today.