If you are interested in putting an offer on a house, you can’t afford to be without a lender letter. Right now houses that are on the market are getting multiple offers and an offer without a lender letter could get put on the bottom of the stack.
Why is this? And why is a lender letter important?
A lender letter is a way of letting the seller know that you are serious and that you are ready to purchase this property. You are presenting to them your sincerity about buying the property because it means you have met with a lender and provided the needed financial documents to secure your ability to qualify for this property.
Please understand that this is NOT a guarantee for loan approval, nor a promise that the seller is going to accept your offer, but having a lender letter can increase the chances of your offer being accepted.
A Pre-approval is when you have provided the following items to your lender for them to review:
- Check/run your credit report with all three credit bureaus
- Copies of your last two (2) years tax returns (ALL PAGES)
- Copy of two (2) most recent pay stubs
- Copy of last two (2) years W2’s
- Copy of two (2) most recent bank statements for savings, checking (401k, retirement funds if applicable) ALL PAGES!!!
If you have not provided the required financial documents to your lender but have disclosed your financial information, then you are only Pre-Qualified (pre-approved vs. pre-qualified). not Pre-Approved. You don’t want to have any surprises, nor do you want to waste your time and/or money, so I strongly advise getting pre-approved BEFORElooking at homes and putting in an offer.
Your lender letter is important and it should be done correctly, not rushed. Take the time to send in the needed financial documents, allow your lender the time to review and then discuss your loan options and what purchase price you should be looking at.
*Quick note: with rates rising (on average about 1%), this will now decrease your purchase power by 10%. Meaning that the purchase price you have been looking at will need to drop by 10%, unless you are able to qualify for the increase in monthly payment. (be sure to discuss with your lender)
If you’re planning to go looking at homes over the weekend make sure to get your lender letter ahead of time!!! Not every lender will have the capability of getting you a lender letter over the weekend! So be prepared, let your lender know and get your lender letter in advance.