Information in a pre-approval letter includes the amount of money a potential borrower qualifies for, the National Association of Realtors explains. This figure is usually adjusted depending on the applicant's income, expenses or credit history.Continue Reading
A pre-approval letter generally includes a date the offer expires, Broker Outpost notes. Additionally, the letter usually contains the terms and conditions of the loan the potential buyer is pre-approved for. The information in the letter may include the contact information for the lender and the interest rate attached to the pending loan.
There is generally a three-step process for being qualified for a loan, and prequalification is the first step. From there, the lender moves to the pre-approval process and ends with an approval. The prequalification is letting the potential buyer know the lender is willing to investigate the potential buyer's financial situation to determine whether an offer for a loan may be extended to the buyer. The lender uses this period to confirm the accuracy of the financial information provided, Fox Business notes.
Pre-approval letters generally carry more weight than a prequalification letter, because a buyer with a pre-approval letter can expedite the time frame for making a purchase offer to closing a sale, Fox Business says. A buyer who has been pre-approved usually has a better chance to make a solid offer than buyers who don't yet have pre-approval.Learn more about Law