Have you had this experience? You receive a pre-approval letter from a lender only to find out after the purchase contract is accepted that the lender has several serious conditions attached to their approval which places the approval in doubt.
From an agent’s viewpoint, the letter must clearly state that the buyer has been vetted by the lender and is creditworthy for the loan. As I see this, the letter should state that the lender has:
- Received a complete loan application from the buyer;
- Verified the buyer’s employment, income, assets, debts, credit history and score.
- Substantiated availability of down payment and closing costs
- Documented and tracked gift funds.
Since most real estate purchase contracts require the buyer to provide proof of funds for down payment and closing costs, a well prepared pre-approval letter can cover this requirement.
The pre-approval should state that the lender is in a position to fund the loan upon the receipt of a satisfactory Appraisal and acceptable Preliminary Title Report.
So I ask: what is a genuine pre-approval letter? What does a credible pre-approval letter need to say?