Mortgage PreApproval Letters
What is a Mortgage PreApproval Letter?
A Mortgage PreApproval Letter is an important "shopping" tool for
prospective homebuyers giving them a clear picture of what they can
afford and adding financial "clout" to their purchase offers.
What is the difference between a PreQual and a Mortgage PreApproval Letter?
Mortgage PreApproval Letters differ from a simple PreQual in several ways. A PreQual is
an indication or estimate of what a prospective buyer might be able to
afford. But, the projected loan amount is based on unverified income,
asset and credit information and is usually not in writing.
A Mortgage PreApproval Letter,
on the other hand, is a fully processed loan (except for the property
appraisal). The lender has reviewed and verified all the information on
a Standard Loan Application (1003) to confirm the accuracy of the
prospective buyer's income, assets and credit. Assuming things don't
change in the interim, and that the appraisal supports the purchase
price once a purchase offer is made, the buyer, seller and brokers
involved all have reasonable assurance that lender will make the loan.
What are the benefits of a Mortgage PreApproval Letter?
A Mortgage PreApproval Letter eliminate uncertainty and elevate the stature of a purchase offer. Prospective buyers can:
- Establish a maximum purchase price and monthly payment to simplfy and focus their search to a specific price range.
- Gain financial "clout" to get their purchase offer accepted. A written Mortgage PreApproval Letter from a recognized lender elevates the purchase offer and eases the seller's concern that the buyer might not qualify.
- Eliminate uncertainty and false starts. Knowing where to focus the home search efforts and knowing in advance that there are no major income, asset or credit issues to derail and disappoint gives buyers the confidence to move forward.
- Once a Mortgage PreApproval Letter has been issued, NFH will reset your My HomeBuyer Alert preferences to simplify your search. When a home appears on the market that is within the PreApproved limits, you can take immediate action to visit the property and make an offer (See Real Estate Services).
Am I assured of getting the loan with a Mortgage PreApproval Letter?
Nothing can be guaranteed, but you will be much closer to getting your
offer accepted and closing your loan with a Mortgage PreApproval
Letter. Be aware, however, that the property you select must appraise
for the purchase price. Also, if interest rates have risen, your total
loan amount may be reduced. And, the lender will update your income,
asset and credit information to make sure there have been no changes.
The Mortgage PreApproval Letter will contain other conditions and
exceptions that you should review. All that said, a Mortgage
PreApproval Letter will put you in the very best negotiating position.
Who provides my Mortgage PreApproval Letter?
Northbay Family Homes participates with national, regional and local
Alliance Lenders who review Loan Applications and issue the Mortgage
PreApproval Letters. Northbay works directly with you through a
One-on-One loan interview to develop a basic information package and
credit file to present to the Lender.
What is an Alliance Lender?
An Alliance Lender is an experienced mortgage lender that offers loan
programs (sometimes with Affordability Features) appropriate for first
time buyers and workforce families. Alliance Lenders have experienced
lending teams and are able to offer specialized assistance for Northbay
Family Homes buyers. Alliance Lenders currently include Bank of
America, Well Fargo Bank and Redwood Credit Union.
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