Lender Letter 101

You should always be in a state of readiness when you’re house-hunting. And this means ensuring you have a letter from a lender signifying that you’re ready to buy a home.

In the past, your real estate agent or broker chose a lender whose job it was to arrange a mortgage loan after the seller had accepted your offer.

Now, you need documentation showing that you’re in a position to buy. Many buyers confuse pre-qualified with pre-approved, believing that if their lender pre-qualifies them for a mortgage, it means that they have been pre-approved for a home loan. Not so. The terms “pre-qualified” and “pre-approved” are different, and a misunderstanding may prove disastrous.


To get a pre-qualified letter, you need to supply the lender with your overall financial picture, including your debt, income, and assets. This can be simply done with a phone call, and you likely won’t be charged a fee. With this information, the lender will have an idea of the amount of mortgage you will qualify for. However, this process does not look closely at your credit report, and it also won’t tell your lender whether you’re actually able to purchase a home.


Obtaining pre-approval is more complicated. You’ll be required to pay an application fee and supply the necessary documentation to complete the lender’s picture of your financial background and current credit rating. From this, the lender can figure out the specific mortgage amount you’re approved for. You’ll also have a better idea of the interest rate you’ll be charged on the loan and, in some cases, you might be able to lock-in a specific rate.

When you find the right home, you fill in the appropriate details, and the pre-approval becomes a completed mortgage application. Finally, a “loan commitment” is issued by the bank when your application is approved. Then, finally, you buy your home.

About me

I’m a Realtor in Southern Nevada. I look forward to working with you! To learn more about me, go to Linkedin.com and enter my name in the search bar. I can be reached at (702) 358-7075 and RonaldSellsVegas@gmail.com. Follow me on Twitter @ronfeir and Ronald Feir on Facebook. Please read my blogs on WordPress.com and Tumblr.com. If you still have time, explore my cyber home, boards, and pins at Pinterest.com



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