Law Office of Ryan S. Shipp, PLLC

Why a buyer should get a pre-approval letter

When a Florida resident is ready to start the home hunting process, it may be worthwhile to get a letter of pre-qualification. This is a letter from a lender saying how much an individual would qualify for based on income and other information provided to that lender. This is not the same as a letter of pre-approval, which is an estimate based on information provided on tax returns and other documents.

However, the loan will not actually be approved until a property has been chosen and additional paperwork has been submitted. While an individual may decide to include either a pre-qualification or pre-approval letter in the offer, the pre-approval letter generally carries more weight. This is because a seller knows that the buyer is likely able to get financing to close the deal in a timely manner.

Ideally, a buyer will get the tentative approval from a lender who has a good reputation in the community. Taking this step can be particularly helpful in competitive markets where sellers will get many offers for their homes. However, buyers who are in the process of getting a pre-approval letter may still wish to include their pre-qualification letter as a sign of good faith. Such a letter may also be necessary before brokers will work with buyers.

Buying residential property may be a complex experience for many people. It may be ideal to have an attorney available to ask questions throughout the process. This may make it easier to understand the difference between pre-approval and pre-qualification letters. It may also make it easier to understand mortgage loan or purchase contract terms. Legal counsel may be present at the close of a real estate transaction to further ensure a buyer is comfortable with what is happening.

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Law Office of Ryan S. Shipp, PLLC | 814 W. Lantana Rd., Suite 1 | Lantana, Florida 33462 | Phone: (561) 699-0399 | Map & Directions