A conditional loan approval is an indication from a lender that you would likely be approved for a loan if certain conditions are met.
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What is a conditional loan approval?
A conditional loan approval is a written commitment from a lender that says they will give you a loan, provided certain conditions are met.
The conditions could relate to anything from the property you’re buying (e.g., the appraised value must be at or above a certain amount) to your financial situation (e.g., you must provide proof of income).
Typically, a conditional loan approval is issued after you’ve completed a loan application and submitted all required documentation. The lender will then review your file and issue the conditional loan approval, which outlines the conditions that must be met in order for the loan to be finalized.
Once you’ve met the conditions outlined in the conditional loan approval, you’ll receive a final loan approval and can close on the loan. If you’re unable to meet the conditions, the loan will not be approved and you’ll need to reapply.
What are the conditions of a conditional loan approval?
A conditional loan approval is when a lender gives you the green light to shop for a home within a certain price range. The approval is based on your financial situation, including credit score, employment history, and other factors. Once you find a home and make an offer, the lender will then issue a final loan approval (or denial) based on the home’s appraised value and other conditions.
How long is a conditional loan approval good for?
A conditional loan approval is good for a set period of time, typically 60-90 days. This gives you time to get your documentation in order and finalize the loan. If you are not able to finalize the loan within that timeframe, you will need to reapply and go through the process again.
What if I can’t meet the conditions of a conditional loan approval?
If you can’t meet the conditions of a conditional loan approval, your loan application may be denied. Be sure to ask your lender what conditions you must meet and what documentation you’ll need to provide to ensure a smooth loan process.