Go Ahead & Get A Pre-approval Letter
You do not want to look for houses above and beyond your means, so why would you want to get pre-approval letter from your lender? Sometimes, real estate transactions do not make it to closing (we call it “falling out of escrow”) because the buyer proves unable to qualify for a large enough mortgage with acceptable terms (the length of the loan, the % rate of the loan, the stipulations of the loan, etc.)
A buyers ability to finance the transaction is particularly important in today's market because many sellers are receiving multiple offers for their homes. We call this a “HOT” market! You will stand a better chance of having YOUR OFFER accepted if:
- You have a good credit history
- You offer a sizable earnest money deposit with your offer
- You are willing to make a high percentage down payment
- You show other signs of financial ability to close the transaction
One of the very BEST ways to demonstrate your financial strength (#4) is to attach a pre-qualification or preferably a pre-approval letter (from a reputable lender) with your offer. This COULD actually make the difference between YOUR OFFER being accepted over the others and/or with less negotiations.
Usually the pre-approval letter is more reliable than the pre-qualification letter as the pre-approval process involves more investigation by your lender. For a pre-qualification letter your lender usually only relies on a credit report and verbal data from you to calculate a rough maximum loan amount. For the pre-approval letter, your lender examines your recent paycheck stubs, W-2 forms, bank statements and possibly income tax returns.
Neither letter is difficult to obtain and neither is an absolute loan commitment. There will still be “subject to” items that must be completed before the loan receives FINAL approval. The pre-approval letter generally only requires an appraisal of the property.
We welcome an opportunity to discuss this process with you further and would be happy to give you a list of reputable lenders that will work with us on these pre-approval letters. There IS a certain way for these letters to be done AND there are some things about presenting your pre-approval letters in the correct manner that as your REALTOR® we are experienced in handling.