When it comes to real estate, you may have heard the term “agreement in principle” tossed around. But what does it actually mean?
An agreement in principle is a preliminary agreement between a buyer and a lender, where the lender agrees to lend a certain amount of money to the buyer for a property purchase. This agreement is usually made before a formal mortgage application is completed, and is based on a general assessment of the buyer`s financial situation and the property being purchased.
But what other terms can be used to describe an agreement in principle? Here are some synonyms you may come across:
– Mortgage in principle: This is another way to say agreement in principle, and is commonly used in the United Kingdom.
– Decision in principle: This term is also used in the UK, and refers to the lender`s decision to lend the buyer a certain amount of money, based on a preliminary assessment of their financial situation.
– Pre-approval: This term is commonly used in the United States, and refers to a similar preliminary approval process for a mortgage.
No matter what term you use to describe it, an agreement in principle is an important step in the home buying process. It can give you a good idea of how much money you`ll be able to borrow, and can help you narrow down your property search to homes that are within your budget.