A pre-approval letter is a letter issued by your lender to indicate that they have reviewed your income, assets, and credit; and has conditionally approved you for a specific loan amount. The pre-approval letter will also show the type of loan that you will be using and the conditions that you will have to meet to obtain the loan.
Here is a sample pre-approval letter.
Frequently Asked Questions
Am I Guaranteed a Loan If I am Pre-Approved?
No, you’re not guaranteed a loan. Loan pre-approval is just the beginning. The lender will take you through their stringent due diligence process called loan underwriting that will determine if the loan will be issued or not. Also, the commitment to issue you a loan is contingent on several factors such as:
- A qualified property, e.g., it must be in a condition that is approved by the lender.
- A ratified sales contract
- A satisfactory appraisal
- All required title documents including satisfactory title binder
- Satisfactory review of HOA or condominium information
Do I Need a Pre-Approval Letter?
If you are planning to make an offer on a property, you will need to have an up-to-date pre-approval letter. Without this letter, most Sellers will not take your offer seriously, or might not consider your offer at all.