Pre-Approval

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What is the Value of Obtaining a Pre-Approval Letter?

Best to Obtain: In Advance Of Making An Offer To Purchase

Pre-approval is the process by which a potential buyer applies for financing with a lender or broker prior to securing a purchase agreement with a seller. The buyer usually has some idea of the proposed acquisition price, which the lender/broker uses along with credit and application information (i.e. employment & assets) to determine if the buyer/borrower is qualified to make a purchase at the proposed price.

The file can be either formally underwritten with the property address left blank in the loan application or can be done informally by rewiew of an experienced loan officer or broker. Either method requires the review of the same information. Whether formally submitted or not, the file is still subject to acceptable appraisal, title, purchase contract and verifying assets, income and employment.

Generally, there is no cost to the perspective buyer to obtain a pre-approval. Some lenders, however, may require the buyer/borrower to pay the credit report fee upfront.

A pre-approval is generally valid with a lender for 60-90 days, however, most real estate transactions necessitate that a pre-approval letter be specifically tailored to each offer. Oftentimes, the buyer qualifies for a much greater purchase/loan amount or he/she could even pay cash. The seller and the seller's agent do not need to know how well-qualified the buyer is. By using, for example a pre-approval letter that states that the buyer is qualified up to a $900,000 purchase when borrower is offering substantially less could cost the buyer more money or the transaction.

The potential buyer, as well as their real estate agent, are provided with a letter of pre-approval by the lender/broker. With the competive real estate market we have seen from 2000 to 2005, most real estate agents require a pre-approval letter prior to submitting an offer to purchase. Oftentimes, in multiple offer situations, those that submit a pre-approval letter along with their offer have a much better chance to be in the running that those that do not. Also, the real estate agent wants to know upfront if he/she had a qualified buyer, so as to not waste thier time and money on someone that is not qualified.

Buyers that are serious about buying a property and want to be poised to capitalize on a "good deal" must be pre-approved to be competive in today's real estate market.

Call Today To Get Pre-Approved.

If you are pre-approved in advance, on most days, we can e-mail (or fax) you a pre-approval letter tailored to a specific purchase situation with an hour or so.