In today’s competitive real estate market it is often essential to have full underwriting approval before making an offer. The purpose of this is to make you more competitive than other buyers by removing your loan contingency, offering a shorter closing period and making the seller aware that you’re a serious buyer.
The same documents that you provide for loan prequalification are used to secure formal loan approval. The approval is generally made for the highest purchase price/loan amount for which your loan officer thinks you are qualified. This gives you total flexibility to make any appropriate offer with the assurance that your loan will go through, subject to a satisfactory property appraisal.
It is at this stage that your loan officer will submit your loan request to an automated underwriting system (AUS) to secure preliminary approval. An AUS “accept” finding means that your application profile appears to meet the key requirements for the financing you have requested. It is not a formal approval, however, as this is only provided after review by a human underwriter.