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Pre-Approval Letter – Is it Necessary?
Many clients ask “why is a pre-approval letter necessary?”, since a pre-qualification was already done. To answer this question, I thought we’d explore what each phase of the process entails to get one to the actual mortgage loan. A pre-approval letter and pre-qualification letter are not the same. Neither one is a guarantee that a lender will give you a loan but the pre-approval letter holds far more weight than the pre-qualification letter. The ultimate goal for a borrower is to obtain a commitment letter from the lender. Let’s look at each one and see what the difference is.
This process is quick and simple and only gives you an idea of how much you might qualify to borrow. There is no application process and the number is based on your word of mouth as to how much income, assets and liabilities you have. The pre-qualification process does not include an analysis of your credit report or an in-depth look at your ability to qualify for a home mortgage loan. Many people use this as an initial step because it is simple, fast and there is typically no cost involved. Often the pre-qualification can be done over the ... more
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