Pre-Approval/Approval In Principal(AIP)
After checking the creditworthiness and ability to pay off a mortgage loan the bank issues this document. It indicates a strong likeliness of the bank to approve the applicant’s mortgage application. Pre-approvals can be obtained without any processing fees and are generally valid for 30-90days.
The pre-approval will clearly state the remaining requirements to be fulfilled to issue the Final Offer Letter (FOL). Once a pre-approval letter is expired the applicant will need to submit updated documents to revalidate the pre-approval, furthermore, there may be associated revalidation fees.
Pre-approval is a valuable tool to plan your home purchase, some sellers may require a pre-approval to sign an MOU if the buyer is seeking financing to buy a property.