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Is a Pre-Approval Letter Necessary

Monday, May 13, 2019

Is a Pre-Approval Letter Necessary?

With the high rate of home sales in our area, a pre-approval letter is a necessity if you’re considering purchasing a home. The Wagley Group recently listed and sold a home within four days, proving that homes aren’t staying on the market long enough to allow potential buyers time to go through the pre-approval process once they’ve found their “dream home,” that’s already on the market.

A common question is, “What’s the difference between a Pre-Approval Letter versus a Pre-Qualification letter?” Simply put, with a pre-approval letter, the lender has verified income, checked employment status(es), and done a credit check. With a pre-qualification letter, none of these things are done. In today’s competitive market, it’s the pre-approval letter that you need.

So, what should your pre-approval letter include? See the main points below:

  • The letter should be clearly defined as a “Pre-Approval Letter.”
  • The lending institution (bank, etc.) who is providing the loan should be clearly stated.
  • The type of mortgage program being used (Conventional, Rural Development, FHA, VA, etc.)
  • The amount of money you are pre-approved for (if you currently own a home – the letter should also state the circumstances relating to this property and your ability to borrow).

It is best to update the Pre-Approval letter with a current date and have the amount equal to the purchase price.

  • The terms of your pre-approval – amount financed and interest rate.
  • The expiration of your pre-approval, or how long your pre-approval is good for.
  • Contact info for the individual whom provided the pre-approval.
  • If known, the address of the home.

Don’t let the lack of a Pre-Approval Letter be the reason you miss out on your dream home. Give The Wagley Group a call today 517-265-6000. We’d love to give you a list of lenders in Lenawee County who would be willing to work with you.