When a Pre-Approval is Not a Pre-Approval

Real Estate Agent with Eleven Oaks Realty

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:

  1. Received a complete loan application from the buyer;
  2. Verified the buyer’s employment, income, assets, debts, credit history and score.
  3. Substantiated availability of down payment and closing costs
  4. 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?  


Comments (2)

Candice A. Donofrio
Next Wave RE Investments LLC Bullhead City AZ Commercial RE Broker - Fort Mohave, AZ
928-201-4BHC (4242) call/text

Just what you listed numerically;

"Borrower's income, assets, credit, employment and/or gift funds have been reviewed and verified, and based on the info obtained by Lender, Borrower is approved to make a purchase to/of X dollars with X type of loan and X terms."

Jul 16, 2009 05:52 AM
Pat Champion
John Roberts Realty - Eustis, FL
Call the "CHAMPION" for all your real estate needs

All the factors you stated are factors for a pre-approval. Thanks for sharing.

Jul 16, 2009 06:04 AM