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PRE-APPROVAL LETTERS

By Marge Harris

Serious buyers in the real estate market today should have pre-approval letters from their lender of choice PRIOR to seriously shopping for their new home. Why? Very simply, a pre-approval letter is good for the buyer AND the seller!

A pre-approval letter specifies exactly how much a buyer is qualified to borrow based on "verified" income, debt and credit history, giving the buyer the confidence to shop in a certain price range. (This is completely different than the prequalification process where the lender suggests the loan amount the buyer qualifies for based completely on the information the buyer provides - without verification.) In addition, the pre-approval process provides the buyer the opportunity to work with the lender to determine which loan programs might be best - given their situation.


Marjorie S. Harris
Real Estate Broker
Senior Real Estate Specialist
[e-Pro Certified]

Secondly, sellers and real estate agents are more comfortable negotiating with a buyer who has attached a pre-approval letter to the offer to purchase. A buyer's financial qualification to purchase the home is, obviously, of utmost importance - and rightly so! (This is especially true in a multiple offer situation, where more than one buyer is presenting an offer to the seller.)

Now, don't confuse pre-approval letters with loan commitments! The actual loan commitment will be executed after the negotiation is complete, the home has been appraised, and there is verification that the buyer's financial situation is unchanged.

Letters of mortgage pre-approval, in my opinion, are a must if a buyer is serious about buying a new home! If you have questions about loan pre-approval, as always, feel free to contact me directly.

©2002 Marge Harris. Publication or use of this article on or off-line without written permission from Marge Harris is prohibited. If you would like to use Marge's articles on your Web site or in your publication, just email Marge for details!

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