What Is Pre-Approval Letter?
Pre-Approval Letter: A letter from a lender, sent with an offer, showing the buyer is approved to borrow up to an amount.
A pre-approval letter is the document you attach to an offer to show the seller you can get financing. It states your name, the loan program, the maximum purchase price or loan amount and an expiration date.
Tips for using it
- Match the letter to the offer. If you're approved for $500,000 but offering $450,000, send a letter for $450,000 so the seller doesn't see your ceiling.
- Make sure it's current. Expired letters weaken offers.
- Include the program. Sellers sometimes ask whether the buyer is using FHA, VA or conventional financing.
What it isn't
The letter is not a loan approval, a commitment to lend or a rate lock. Final approval comes after the appraisal, title and underwriting.
Good to know
Unbeatable can generate a pre-qualification letter for a specific home from your saved profile.