Check your understanding

Check your understanding of key concepts before moving to the “Do it yourself” section.

Indicate whether each statement is True or False.

1. Pre-approval is based on your credit report, the down payment, and your expense ratios. There is nothing you can do to change the amount that you will be pre-approved to borrow.

You are correct! The statement is false. There are many things you can do to improve your chances of being pre-approved, and later approved, for the mortgage you need. Revisit the first section of this course, Estimate Your Price Range , for more advice.
Sorry, the statement is not true. There are many things you can do to improve your chances of being pre-approved, and later approved, for the mortgage you need. Revisit the first section of this course, Estimate Your Price Range , for more advice.

2. Pre-approval is a legally binding guarantee that your loan will be approved once your offer to purchase a home is accepted.

That's correct! The statement is false. Pre-approval is not a legally binding guarantee that your loan will be approved. When you make an offer to purchase a property, the lender will want to see that the property is appraised for an amount more than, or equal to, the purchase price. Furthermore, the lender will run your credit score again, so don’t do anything that will lower your score while you are shopping for a home.
Sorry, the statement is not true. Pre-approval is not a legally binding guarantee that your loan will be approved. When you make an offer to purchase a property, the lender will want to see that the property is appraised for an amount more than, or equal to, the purchase price. Furthermore, the lender will run your credit score again, so don’t do anything that will lower your score while you are shopping for a home.

3. Your pre-approval letter is generated by the underwriter once the loan representative submits your verified information into the automated underwriting system.

You are correct! The statement is false. A lender may give you a pre-approval letter without ever running your information through the automated underwriting system. However, the pre-approval is more reliable if it is based on the result of the automated underwriting system. Ask your loan representative how the pre-approval decision was made.
Sorry, the statement is not true. A lender may give you a pre-approval letter without ever running your information through the automated underwriting system. However, the pre-approval is more reliable if it is based on the result of the automated underwriting system. Ask your loan representative how the pre-approval decision was made.

4. Getting pre-approved will help you move closer to securing your loan, but you will have to submit more documentation to satisfy the underwriter before getting a loan commitment.

That's right! The statement is true. The pre-approval promise is subject to a property appraisal and other conditions. Even after you obtain full approval – a loan commitment – your work may not be done. The automated underwriting system will return one of four decisions: approval, approved with conditions, suspended (more documentation needed before a decision can be made), or denied. When you are approved with conditions or suspended you will be told what documentation you need to provide. Don’t rely on your loan representative to take care of this for you. Stay on top of the process yourself.
Actually, the statement is true. The pre-approval promise is subject to a property appraisal and other conditions. Even after you obtain full approval – the loan commitment – your work may not be done. The system will return one of four decisions: approval, approved with conditions, suspended (more documentation needed before a decision can be made), or denied. When you are approved with conditions or suspended you will be told what documentation you need to provide. Don’t rely on your loan representative to take care of this for you. Stay on top of the process yourself.

Practice what you learned Do it yourself

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