What is a Pre-Qualification Letter?
A pre-qualification letter says what’s the maximum a buyer can pay for a home. However, it relies only on truthful but non-verified verification. This is an informal estimate and the information can be done by telephone, email, online or in person.
What is a Pre-Approval Letter?
A pre-approval letter provides documentation of exactly how much mortgage the borrower have been approved to borrow. This is based on the borrowers income, assets, debts and credit. This is more detailed than a pre-qualification letter and it involves verification of data and underwriting. A pre-approval letter can make a big difference for home buyers, it shows the sellers that you are very serious about buying their home.
What is a Loan Commitment?
This is when the buyer does full on loan application and this can be completed in person or by mail. The lender will need the borrower’s income, assets, debts and all credit is considered. The bank will need verification of employment, bank statements and verification of deposits and any other form of income or debts the borrower may claim to have.