What do you mean, you need a letter from my Lender?

Real Estate Agent with Keller Williams Metropolitan

I can not agree more with Tish on this.  Would you want your doctor to just give you some pills without analizing just how sick you are, of course not.  As professionals we need to make sure our clients qualify for the home.  I also like to follow the Dave Ramsey principals where you should only spend about 25% of your income on your mortgage!

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Original content by Tish Lloyd

What do you mean, you need a letter from my Lender?

Picture of pen Fair question.  In days of old, Real Estate Agents would show homes to anyone who wanted to look.  We'd put prospective Buyers in our cars, grab our trusty MLS book and drive all over town for days, just looking at homes.  Often a prospective Buyer would fall in love with a home and we'd write an offer, only to find out, AFTER they had applied for the loan, they didn't qualify for that amount.

So, we Loan Officers and Real Estate Agents got smart.  We started suggesting Buyers get pre-approved or pre-qualified (in my opinion they are different, though many agents use the terms interchangeably).  Like most anything new, it took awhile for everyone to see the benefit of doing this.  Once it was realized how much more productive that information made everyone's lives, it became an industry norm.

You may very well have $500,000. cash just sitting in the bank for you to use in the purchase of a home.  You may have a credit score in the 800's and the ability to get any loan for which you apply. 

The Sellers have no way of knowing that.  I have no way of knowing that.  Frankly, I don't need all of your financial information.  I simply need a letter from your Lender or Bank, stating that you have the ablility, the qualifications and funds to purchase a home.  If you are only able to secure a loan for $300,000, there's no reason to look at homes in the $500,000 range.  Even if they are over-priced, chances are good they're not THAT over-priced and it's a waste of everyone's time and energy to look at homes which are out of your price range.  Did I mention the cost of gas?

You would be surprised at the number of people who think they have more buying power than they actually do.  Regulations are tight, banks are making it more difficult to obtain loans.  Even people with excellent credit and cash on-hand are finding they are unable to obtain loans, as in days-gone-by.  It's just so muchPicture of house and keys better when we know up-front, how much home you can comfortably afford.

Now when it comes time to submit an offer, we'll want a letter from your Lender or Bank which is tailored to the property on which you have chosen to make an offer.   No generic," Mr. & Mrs. Buyer can buy up to $XXX,XXX".  That's the type of letter which is going to hurt your negotiating power.  We'll want one that says you are ready, willling and ABLE to purchase XYZ Maple Street for $XXX,XXX.

When I ask for a letter from your Lender or Bank, I'm not trying to be difficult or nosy;  I'm trying to keep all of us from wasting time and energy.  Did I mention the cost of gas?  Buying a new home should be fun and exciting -- it quickly stops being that when a Buyer falls in love with a home, only to discover it's out of their reach . . .


   Copyright © 2010 - 2011 All Rights Reserved

Tish Lloyd, REALTOR®


NC Real Estate Lic. 269076

Prudential Laney Real Estate

527 Causeway Drive

Wrightsville Beach, NC  28480

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Comments (2)

Tish Lloyd
BlueCoast Realty Corporation - Wilmington, NC
Broker - Wilmington NC and Surrounding Beaches

Keith ~ Thanks so much for the re-blog!  I'm honored!  Now more than ever we have to work smart and getting pre-approval for our buyers is paramount!

Apr 26, 2011 03:36 AM
Andre R. Aragon
Greater Tampa Real Estate Photographer - Tampa, FL
Real Estate Photographer

Hi Keith and Tish - In our home buying experience we were asked if we were pre-approved. We were, and it just made sense to us to search for homes this way. We did not want to waste any one's time driving around and looking at housse that were out of our league. Did I mention the price of gas?

Apr 28, 2011 02:47 AM