What is Pre-Approval?
If you are looking to purchase a property (such as a home, vacation home, condominium, investment property) in order to have a realtor take your offer seriously, you need to get pre-approved for a loan. You need to be able to show that you can afford the purchase price and the mortgage payment, that you have the down payment and will qualify for the needed loan amount.
Pre-approval is getting an underwriting approval for the borrower that is substantiated by your credit report, income documentation, and asset documentation up to a purchase price amount for specific property types such as single family residence (SFR), duplex, triplex, and fourplex in residential lending.
Why Get Pre-Approved?
Once a borrower is pre-approved, realtors will take your offer seriously. A pre-approval letter is the lynchpin — an actual document to show that you can get the loan needed to complete the sale.