The Pre-Approval Letter

Having a pre-approval letter from your lender could make the difference as to whether or not you get that dream home. When house hunting, many buyers make the mistake of waiting to contact a lender until after they have located the home they like. As a buyer, you will be in a much better position with a seller if you are pre-approved.

The Pre-Approval Letter

To effectively look for a new house, you must know the amount you can borrow from a lender. There is nothing worse than finding your dream home, and then failing to qualify for the amount you need for a loan.

Avoid this by asking your lender to pull your credit information and to let you know what needs to be done to get a pre-approval letter. If you are going to have problems getting a loan, it is better to know about it as early as possible.

Sometimes buyers resist contacting lenders because it’s not an enjoyable part of the home buying process, and they’re afraid an extra credit check will reduce their credit score. This resistance is foolish.

Buyers who get their loan arrangements lined up at the beginning of the house buying process are really doing themselves a favor. Your pre-approved status can give you an edge over the competition. In fact, it can make a seller choose you over another bidder.

Presenting Your Letter to a Seller

When you tell the sellers you want to buy their property, give them a copy of your pre-approval letter. They will probably recognize the value of the letter, but don’t depend on this assumption. Make sure the seller realizes the loan is already approved.

As you give the seller the letter, explain that you are serious about making the transaction go smoothly and, for that reason, you have already been through most of the loan application process. Tell the seller that the only remaining thing to do is to give the lender a copy of the contract that you and the seller sign, and the property needs to appraise for an appropriate amount.

Taking this approach puts you in a very strong position. The seller knows you are not just wishing; you are capable of buying his property.

One of a seller’s worst nightmares is signing a contract with someone, taking his property off the market, wasting time and then finding out that the would-be buyer cannot get a loan. On the other hand, you are a dream come true for the seller.

Put on your shining armor and get pre-approved by a lender. Once you have the letter in hand, get out there and find your dream home.

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