Definition of Approval
- An assessment or judgement made by a lender regarding the ability of a borrower to repay a mortgage loan. Being approved also helps the borrower when home shopping because the lender will confirm the amount the borrower can obtain to purchase a home.
Related Terms and Acronyms
- Credit Report (CR) — Acronym, Very Important,
➥ A report that outlines the credit worthiness of an individual or entity.
- A report on a loan applicant's willingness and ability to make payments in a timely manner in the past. This report is provided to the bank by an outside agency.
- Credit Rating (CR) — Acronym, Very Important,
➥ A metric to measure the credit worthiness of a debtor.
- A judgement of a person's ability to repay debts. The rating is often based on a person's current and projected income and past debt payment history. Also called a credit score.
- Conditional Commitment — Definition,
- A promise by a lender to make a loan if the borrower meets certain requirements.
- LPQ Amount — Definition,
- A term used by CanEquity which is short for Loan, Purchase or Qualification amount.
- Pre-approval — Definition,
- A process that mortgage lenders use to determine how much money they would lend you based on a thorough review of your financial situation. Lenders issue a pre-approval letter which strengthens your position when bidding on a home, as it shows sellers that you will be able to raise funds needed to purchase.
- Pre-Approval Expiry Date — Definition,
- The date when a pre-approved mortgage expires, often 90 - 120 days after being pre-approved.
- Mortgage (mtg) — Abbreviation, Important,
- A mortgage is a contract stipulating a specific real property, typically a residence or building, as collateral for a loan. The mortgage incurs a rate of interest that varies according to term and other features.
- Lender — Definition,
- The bank or mortgage company offering the loan.
- Pre-approval Letter — Definition,
- A document from a lender or broker, estimating how much a potential home-buyer could borrow, based on current interest rates and a preliminary look at credit history.
- Pre-qualification — Definition,
- An informal process in which a lender will offer an opinion on how much money you may be able to borrow. This opinion is based entirely on the financial information you provide and is neither binding nor necessarily accurate because lenders have not yet verified your financial information.