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Im selling my house and we got an offer 10 days ago.
My agent told me by Friday buyer will have loan app completed.
What does it mean?
Does it mean by Friday my buyer will be 100% approved for loan or just completed pre-approval letter?
Its hard to interpret what is meant, but my guess would be the buyer will have gathered all the necessary documentation and the loan will be ready to go to the underwriter.
Loan application is the first step. The second step is documentation, the third is verification, then underwriting, then more documentation, back to underwriting, then maybe, hopefully, loan approval.
Im selling my house and we got an offer 10 days ago.
My agent told me by Friday buyer will have loan app completed.
What does it mean?
Does it mean by Friday my buyer will be 100% approved for loan or just completed pre-approval letter?
He should have had the pre approval letter before making an offer.
Loan app means the actual application for the loan.
It would not hurt to request specific information. There are so many variations of the definition, the CFPB has now defined a loan application as a lender only having six pieces of information (name, income, social security # (for credit report), property address, sales price and loan amount). I have prequals that send me enough documentation after first contact, I could submit their loan to underwriting. But on the other side, I have applications that I feel like I am pulling teeth with tweezers, I have the six pieces of information and receive the supporting documents piece by painful piece.
I would be very surprised if we don't see the Board of Realtors come out with definitions for their contract what constitutes an application - I am certain their intent is not meant to mirror the CFPB's (which is very minimal info). The CFPB set this definition to prompt the lender to send disclosures to the consumer, which has nothing to do with assuring the seller the process is underway. In fact, most sellers wouldn't ratify a contract if they knew only the CFPB's definition of a loan app has been received. Since real estate heavily relies on the contract, I would be very surprised if this ambiguity is allowed to remain.
So you are wise to ask for specifics: has a full application package been done? Has all of the supporting paperwork been turned in (paystubs, W2s, bank statements)? Has a preliminary DU (automated underwriting) been run? Has the appraisal been ordered?
As for approvals, there's credit approval, where the underwriter has only reviewed the buyer's qualifications, and then, there is full approval, or the loan commitment has been issued. The difference is the latter means the appraisal was received and reviewed by the underwriter.
Good luck!
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