Will someone please tell me why I have such trouble getting a PRE-APPROVAL LETTER? Recently, I've had buyers agreeing to get a pre-approval letter, and once they spoke with the lender, they were going to wait until they got closer to actually writing a contract. EXCUSE ME? If I tell you I need a pre-approval letter, I need a pre-approval letter. For one thing, I don't want to waste your time or mine looking at houses you may not be able to buy. Until that credit report is run, we won't know what kind of rate you're getting and how much money you will need for your downpayment.
I wrote an offer today with the world's greatest buyer. I was still irritated when his "pre-approval" letter said, yes, we can do what you want us to do, but it's all contingent on your giving us this, that, and the other thing. That is not a pre-approval letter. That's a p-r-e---Q U A L I F I C A T I O N letter. It's not the same thing. It's contingent. And it can make the difference in whether or not we get the seller's attention and his agreement to sell his house for the amount of money you've told him you're willing to pay.
Why are lenders not giving pre-approval when they are asked for? Or is it really the buyer? What is up with this? Pre-Approval means the buyer is Approved. Period. Hrumph.
PRE-APPROVAL GIVES YOU CONFIDENCE
- How much you can borrow : amount decreases as interest rates rise
- Looking at “Right” homes: price, size, amenities, location
- Find the best loan: rate, term, type
- Uncover issues early: time to cure possible problems
- Bargaining & Negotiation power: price, terms, & timing
- Close quicker: verifications have been received
Items Needed for Pre-Approval
- Photo ID
- Two months current pay stubs
- Last two year’s W2s
- Complete copies of checking and savings statements for last three months
- Copies of statements for IRAs, 401k, savings, CDs, money market funds, etc.
- Employment history for last two years with addresses and contacts
- Proof of commissioned or bonus income
- Residency history for last two years with addresses and contacts
- Assets for down payment, closing costs, and reserves; must provide paper trail
- If self-employed, last two years tax returns, current profit and loss statement and balance sheet; copy of partnership/corporate tax returns for last two years if owning more than 25% of company
- FHA requires driver’s license and social security card
- VA requires original certificate of eligibility and DD214
- Other things may be required such as previous bankruptcy, divorce decree
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