Buyer Tip #2

Get a Mortgage Pre-Approval Letter

Back in the wildcat mortgage days of the 1980's and 90's real estate deals could come together with a pre-qualifying letter. A pre-qualifying letter? Didn't I just say get pre-approved? What's the difference?

A pre-qualifying letter is informal. It can be gotten from a telephone interview with a lender. Basically you tell the lender how long you've worked, how much you make how much you earn and what are your monthly debts. Based on this information the lender will determine, with some qualifications, how much "you're good for". No information has been verified so there's no commitment from the lender. Seller's discount them too. So if your offer is side by side with another that has a pre-approval letter the seller may lean, all things being equal, towards the offer that has financing pre-approved.

A pre-approval letter is formal. There has been a mortgage application completed and a credit report pulled. The lender has taken all the steps to verify employment, prior rent/mortgage history, income and monthly debt load. You know, all the stuff you told the other lender over the phone. But because all your information has been verified, the lender will issue a letter saying they will lend what "you're good for" and you can purchase a home of X dollars.

So, if you are serious about buying a home and you'll need financing to do it; start by getting a mortgage pre-approval. You'll be glad you did.