Conditionally approved what does it mean

Feeling disappointed and frustrated, you wonder how can anyone be more qualified? The conditional loan approval is a statement from a lender asserting that the lender is willing to loan a specific amount of funds to the potential borrower after meeting specific conditions.

The letter or form, however, is not a guarantee that the borrower will receive the funds needed to make the purchase. What is the difference between a conditional loan approval and a pre-approval letter? Click to a view sample of each letter.

The key difference is the conditional loan approval is issued only after an underwriter has reviewed your income, assets and credit report, whereas a pre-approval is issued after a loan officer has reviewed your financials.

Sometimes loan officers may issue you a pre-approval letter without even reviewing any of your financial documents! Thus, the conditional loan approval carries the most weight because your finances have been thoroughly reviewed by the individual who has the authority to grant your loan. Think of it this way…obtaining only a pre-approval is like not studying for a final exam.

You will take the exam, but you have a lower chance of passing the class. With such a big transaction, you must prepare yourself as much as possible by obtaining the conditional loan approval. He has decided that your credit report, income, and level of debt are satisfactory to the bank. This is great! However, you are not out of the woods yet. Conditional loan approval generally happens early in the lending process, before your bank has had enough time or information to make an informed final decision.

So how do you know when your loan has been approved vs. Most likely, you will first learn about the approval of your loan from a phone call or email from your loan officer. In order to change your conditionally approved bank loan into a fully approved loan, there are several types of conditions that may have to be met. These include verifications, collateral requirements, and conditions that bar changes in your circumstances:. Conditional approval letters also generally include the stipulation that you must not experience any major changes in your financial situation.

These might include job loss or major credit problems. The bank will not approve your loan if you do not meet the conditions of the conditional approval.

The lender can also close out your application due to incompleteness if you fail to meet the conditions in a sufficiently timely manner.

For this reason, it is best for you to provide the bank with whatever it has asked of you, in order to keep your application active.

You will have to consider whether or not you wish to move forward with the loan. A conditional offer or conditional approval is not a binding contract - for the bank or for you. Look over the terms of the bank offer and decide whether or not they are the best terms for you. Your offer is less likely to fall through due to lending issues, making a conditional approval more enticing to a seller. Once you get this information back to your Mortgage Advisor, our underwriters will complete their work on your application.

If all goes well with the rest of the underwriting process, congratulations! You can take your approval letter and move forward with the closing process. This is the best-possible outcome of a conditional approval.

There is another potential outcome to be aware of. As mentioned earlier, there is still a chance that your loan application will be denied after you submit all the required paperwork to resolve the conditions on your approval. This typically only happens if you do something like opening a new line of credit after submitting your application, or failing to meet our deadlines for submitting additional paperwork. Your application may also be denied if our underwriters cannot verify a crucial document, even after you meet all the conditions.