Pre approval commitment letter

[Anonymous]

Hello again!

Can someone help clarify the difference between pre-approval letter and pre-approval commitment letter?

To my understanding, I can present a stronger offer on a home with a commitment letter because apparently this means my pre-approval has been seen and approved by the underwriter.

Is receiving a commitment letter pretty typical or is this something that I must request?

How long does it typically take to receive a pre-approval letter and then a commitment letter?

This probably varies between lenders, but what time frame can I expect this commitment letter in? 3 days? 5 days? 7 days?

Also, how long does a preapproval letter and a commitment letter last? I've read usually up to 90 days.

Thank you my friends!

[youdontkillmoney]

A pre qualification is the weaker of the three, with a commitement letter being the strongest and pre approval in between.

I got a pre qualification from Capital One, they ran my credit reports and took my financial information over the phone but did not ask for proof of income, etc

A pre approval being the next strongest is same as above BUT they also ask for proof of income, bank account balances, etc. I got this from US Bank

A commitment letter I got from Wells Fargo, and SoFi, they do all of the above BUT also a live human being or two actually review your file and approve you based on underwriting standards of the lender. This is the strongest kind of review you can get.

None of the above are guarantees, but increase your chances of getting funded if nothing significant changes from the time you got your underwritten "commitment." What counts is once you have a contract in hand between buyer/seller for a home and you go through the underwritten process to get funded...only then will you end up getting funded or not and locking in rates. But commitment is the way to go in my opinion to have more confidence that you will get funded.

A pre approval can be done the same day, likewise with pre qualification.

A commitment lender can be between 1 week if everything is straighforward but more likely 2 weeks, even 3 if the lender is busy. Yes there is an expiration date, 90 days sounds about right. My Wells Fargo commitment letter expires 8/31/16 and it is dated 5/24/16. When it expires I guess I need to resubmit certain docs, but should go quicker if things didn't change much or got better (i.e. more savings).

[ezdriver]

The strongest approval is one from an underwriter. Until your file is fully underwritten, all other approval letters are equally weak.

[Anonymous]

Thank you, Very helpful response! Hopefully you or someone else can help clarify another few questions I had below...

Does the Lender/broker ask for potential down payment amount while running preapproval/commitment? Will I be able to change this amount later?

For example:

Let's say we plan on putting 10% down(25,000) on a $250,000 home, but a bidding war results in the actual offer being accepted at 255,000. If the appraisal comes in at 250,000 and the seller is not willing to negotiate the price down to the appraisal amount, can I lower my down payment amount to 20,000? This would be an easy way to shift around $$ without having to reach into our bank account for more money. We're still putting 25k on the table, but 20k will go towards downpayment and 5k will go towards the cost above the appraisal value of the home.

Is this acceptable and is there any downside or potential fees to look out for when doing this?

For this scenario, assume my rate was locked in once my offer was accepted at 255,000. (If you lock in the rate, does that also commit you to a specified downpayment amount?)

[ezdriver]

---

@Anonymous wrote:

Thank you, Very helpful response! Hopefully you or someone else can help clarify another few questions I had below...

Does the Lender/broker ask for potential down payment amount while running preapproval/commitment? Will I be able to change this amount later?

For example:

Let's say we plan on putting 10% down(25,000) on a $225,000 home, but a bidding war results in the actually offer being accepting at 230,000. If the appraisal comes in at 225,000 and the seller is not willing to negotiate the price down to the appraisal amount, can I lower down payment to 20,000? This would be an easy way to shift around $$ without having to go into the bank for more.

Is this acceptable and is there any downside or potential fees to look out for when doing this?

For this scenario, assume my rate was locked in once my offer was accepted at 230,000. (If you lock in the rate, does that also commit you to a specified downpayment amount?)

---

Whatever scenario is presented to an underwriter is the one that will be underwritten and approved or not. If the scenario changes, the file has to be reviewd again by the underwriter. Generally, any component of the scenario can change but just about all changes must be reviewed by an underwriter.

[Anonymous]

---

@ezdriver wrote:

Whatever scenario is presented to an underwriter is the one that will be underwritten and approved or not. If the scenario changes, the file has to be reviewd again by the underwriter. Generally, any component of the scenario can change but just about all changes must be reviewed by an underwriter.

---

Doesn't all go back to the underwriter anyway before closing? Or if I change my down payment amount it would have to get pre-approved again?

[Anonymous]

---

@ezdriver wrote:

---

@Anonymous wrote:

Thank you, Very helpful response! Hopefully you or someone else can help clarify another few questions I had below...

Does the Lender/broker ask for potential down payment amount while running preapproval/commitment? Will I be able to change this amount later?

For example:

Let's say we plan on putting 10% down(25,000) on a $250,000 home, but a bidding war results in the actual offer being accepted at 255,000. If the appraisal comes in at 250,000 and the seller is not willing to negotiate the price down to the appraisal amount, can I lower my down payment amount to 20,000? This would be an easy way to shift around $$ without having to reach into our bank account for more money. We're still putting 25k on the table, but 20k will go towards downpayment and 5k will go towards the cost above the appraisal value of the home.

Is this acceptable and is there any downside or potential fees to look out for when doing this?

For this scenario, assume my rate was locked in once my offer was accepted at 230,000. (If you lock in the rate, does that also commit you to a specified downpayment amount?)

---

Whatever scenario is presented to an underwriter is the one that will be underwritten and approved or not. If the scenario changes, the file has to be reviewd again by the underwriter. Generally, any component of the scenario can change but just about all changes must be reviewed by an underwriter.

---

I'm made some corrections to my scenario as you can see in the quote above. I was typing that post on my cell phone and realised it wasn't making any sense.