Why do I Need a Pre-Approval Letter?

If you’re serious about purchasing a home, getting a pre-approval letter should be one of your first steps in the home-buying process. It is fundamental to obtain a pre-approval letter before you even begin visiting properties. You may have a hard time getting the attention of home sellers or even real estate agents. The pre-approval involves choosing a mortgage lender and a loan program and providing some basic information.

For most lenders the pre-approval process is really simple–they’ll ask you about your income, debts and assets, and they’ll calculate a maximum loan amount and purchase price based on that information. Loan officers may not verify your information or check your credit rating. Other lenders will be much more thorough – there is no industry standard for pre-qualification.  highly recommend all of my buyers to present not only an earnest check, but also a pre-approval letter and if it’s a cash offer, a copy of a recent bank statement showing they have proof of funds to close.

When you make an offer and an agent receives it with these documents attached (which is almost standard procedure); the real estate agent immediately has more confidence that you are qualified and really intend to close the transaction; in other words you are showing you are a serious buyer.

Lastly, a pre-approval provides you as a buyer vital information as to what price range you should stay within as well as the range of yearly taxes.  A real estate agent who requests a pre-approval prior to showing a buyer homes is trying to save you time and frustration. As a buyer, a pre-approval letter provides you and edge and purchasing power, especially in a multiple offer situation.

If an agent asks if you’re pre-approved, it's a good sign. Because it shows that they are thorough and thoughtful about how they do their business. That is the type of agent you want to have on your side when you’re buying a house, one agent who pays attention to the details. One who isn’t going to waste your time or allow your heart to be broken when you fall in love with a house you can’t do anything about.
If you are ready to buy a home, contact me for a free consultation.