Approval Status: What Does Each Approval Standing Indicate?
A mortgage application goes through several phases. There are also more than one approval status lenders designate to each application. Each one has a purpose. To help you understand each, we offer some details per status.
Approval in Principle
Approval in principle indicates the amount the lender is willing to finance for your purchase. It sets down the maximum limit. Once you have this information, you can decide how much home you’re going to purchase. It’s a helpful number because it allows the applicant to narrow down their search.
The term sheet is a non-binding document. It outlines the potential loan terms an applicant can receive based on their application at that time. It’s a helpful document because the loan terms are outlined including the repayment.
A pre-approval letter is put together by the lender after your application has been summarily assessed. The letter outlines the amount they believe the applicant may receive and the potential interest rate. This may mean the loan amount & available rate is subject to change. Pre-approvals are not formal unconditional approvals & should not be relied on as one.
Conditional approvals are made after the lender sends the applicant a pre-approval letter. It is also given to the applicant after they find their desired home to purchase.
The conditional approval is a good sign in the home loan application process. At this point, the application has reached the underwriter, and the underwriter sees the application as good enough to keep the process moving forward.
A home loan application that reached unconditional approval status means it’s most likely going to be approved unconditionally. All documents have been approved and the lender feels that everything looks good. This is the only approval that is binding, and one may rely on.
Approval Status Conclusion
The Mortgage House lending team offers more than one approval status. To ensure our clients are on the same page with us, our lending team explains them to you in more detail. You can try our mortgage repayment calculator with no strings attached.