The importance of a Pre Approval letter:  The market is extremely favorable for home buyers right now. The current competitive prices are very appealing to the interested buyers and the historical low interest rates make this the best time ever to purchase a home in virtually any location in the U.S.  With the internet resources, buyers are searching and finding homes of interest online then contacting a realtor to begin their search. In most cases, it is a matter of showing 10 or less homes to a serious buyer before they find the home of their dreams.

It is important for home buyers to consult with a lender to discuss the pre approval process. This is a huge time saver should the buyer randomly start touring homes and then decide they want to make an offer. First things first, always get the pre approval letter in hand and then pursue the home search. The main reason for this is to have your buyer's agent present an offer on your behalf and with a pre approval letter which then puts the buyer in a favorable light to the seller so the seller knows they are credit worthy. This is no guarantee however, that the loan will be fully approved until the lender reviews the full application and works the file which is usually a 3-4 week process. 

In some cases, "full lender approval" may be given just a few days prior to closing on the home, but with a pre approval letter in hand, this shows the prospective buyer's credit has been reviewed and they are able to proceed with the full loan process. When an offer is made without a pre approval letter attached, it can be heart breaking for a buyer if they wait to do this step "after" presenting an offer. Although most contracts give the option to select whether the buyer is pre approved or not, sellers need to insist on the letter in advance of agreeing to the contract terms even if the option is there that the buyer will fill out a full application within "5" days of effective date. The reason this is important is for both buyer and seller's interest: if a contract is accepted based on a forthcoming letter within "5" days of effective date, the home would be in "Backup" status until the lender gives the approval letter and some lenders may perceive that there is just a few things they need to get the full pre approval letter to you but in reality, things can turn up and the buyer does not get a pre approval letter which then ties up the property from being in "Active" status and the seller has to go through the formality of completing the cancellation form to put the property back on active status. In most cases, the buyer is usually left feeling very disappointed because they thought they'd have no problem getting a qualified letter from their lender.

Many home buyer "guides" which some realtors provide to their clients, can be very helpful to first and repeat buyers. These guides can provide the necessary tool so that the realtor can cover the timelines and steps with the home buyer so they know the importance of each phase of the home buying process.  This is extremely helpful in today's market where there are so many homes at competitive pricing and many buyers are looking for a "deal", and with a pre approval letter, this puts you, the buyer, ahead of another prospective buyer who may not have a letter to present.