The Value of the Loan Approval Letter – And the 3 Mistakes You Might Be Making
There are a lot of hoops to jump through during the home buying process. Luckily, a trusted real estate agent can guide you away from common pitfalls, and so can an experienced mortgage lender. They’ll both recommend, or more likely insist, that a loan approval letter accompanies any offers you make on a home. These letters are a sign that you’re serious about buying a home and that you’ve already reached out to a lender for the preliminaries. It’s a bit of a formality, but it’s important nonetheless. This is the value of the loan approval letter – and the three mistakes you might be making along the way.
Your Loan Approval Letter isn’t from a Local Lender
This is an important consideration in today’s world of online lending. Real estate is very much a local business, and listing agents tend to feel more comfortable with local lenders they know and trust. Real estate agents know their market, and they’re familiar with reputations and track records. That’s not necessarily the case with an out-of-area lender. If there are issues with the loan, it’s not as simple to track down a lender who lives in a different state, possibly in a different time zone. There’s also the issue of choosing the right appraiser. If your lender is choosing an appraiser at random – highly likely if you’re dealing with someone who lives and works across the country – the odds of finding someone competent could really go either way.
They Give You the Wrong Kind of Letter
There’s the pre-approval letter, and then there’s the pre-qualification letter. The latter is simply proof that a loan application from the prospective homebuyer has been submitted, but it doesn’t mean a credit report has been pulled and it isn’t going to do much for you in the long run. Make sure that you’re getting a pre-approval letter, which means a little work legwork has been handled. This letter serves as proof that your credit, employment, and assets have all been reviewed and verified and that you’re truly qualified to purchase the home.
Your Loan Approval Letter is Over the Offer Price
You may be able to pay more than you’re offering, but the sellers don’t need to know about it. If your loan approval letter is in excess of the purchase offer because you qualify for a bigger loan, get a revised letter. It should indicate that you can afford the mortgage you’re proposing in your offer – and that’s it.
If a loan pre-approval letter is on your to-do list, the Cushing Team here in Reno can help. Contact us today, and let’s make a plan to get you into that house of your dreams.