Pre-Approval Letter

A buyer’s lender issues a pre-approval letter. It states that a buyer is “pre-approved” for a particular loan amount and purchase price. To get a pre-approval letter, you need to submit some basic documentation of your financial situation. Contrast this with a “pre-qualified” letter, which only requires your self-reporting. Needless to say, sellers don’t give a “pre-qualified” letter much weight. If you are a serious buyer, then you should have a pre-approval letter that accompanies your offer.

Given the crazy “seller’s market” of the last several years, even a pre-approval letter may note be enough. The “gold standard” is now “pre-underwritten.” If a buyer earns the designation, it means the lender has fully analyzed the buyer’s finances and documentation and has approved her for a loan in the amount needed to buy the home. With a pre-underwritten buyer, a seller is about as certain as possible that the buyer will be able to get the money needed to complete the purchase.

What’s even better than pre-underwritten? Why, “cash” of course. No loan needed. Cash is king and all but guarantees closing.

 

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