What is the requirement for credit approval in the closing process?

The requirement for credit approval in the closing process is that it must be obtained before the appraisal is ordered. This is important because lenders need to assess a potential borrower's creditworthiness to ensure that they are a reliable candidate for a loan. Getting credit approval prior to ordering an appraisal helps streamline the process and ensures that the transaction proceeds only with qualified buyers.

In real estate transactions, the lender typically wants to confirm that the buyer has the financial capacity to complete the purchase before investing resources into an appraisal, which can be a significant cost. Therefore, securing credit approval early on indicates that the buyer is serious and capable of following through on the purchasing process, improving the efficiency of the closing procedure. This is consistent with standard practices in the industry, where due diligence must be performed in a proper order to mitigate risk for all parties involved.