Benefits Of A Pre Approval Letter

2007-03-08 10:33:40

( Financial )



If you intend to take a loan to buy a car or a real estate property, you may want to get first a pre approval letter. A pre approval letter is what a lender grants you as a signal of approving a loan you want to take out from them.

Here are a few benefits of getting a pre approval letter:

• Priority – Being armed with a pre approval letter, you have an edge among other prospective buyers of the product or property you want to buy. This is for the reason that sellers would most likely prioritize you, knowing that you have a loan approval.

The same is true if you are seeking the help of agents. Your pre approval means you can truly afford the mortgages and other fees you have to incur in purchasing the property or product. They would most likely prioritize you over another prospective buyer who has no pre approval since you have a bigger probability of actually buying and causing them to gain their commission.

• Reliability – A pre approval letter, as opposed to a pre-qualification letter, is more reliable. This is because getting a pre-qualification requires you only to provide some basic financial information to a lender. After which, your pre-qualification letter may be sent to you via fax. This type of loan approval may also be done through the web by simply entering some information and downloading your letter after a few minutes.

On the contrary, before you are granted a pre approval letter, a lot of steps should be taken and time consumed. The lender would have to verify if the information you gave them are indeed true. They do this by taking a look at your credit history, income, debts, and other aspects of your financial life. While this may take a lot of time and effort, sellers know that having gone through such a complex process, you are more likely to be qualified than another buyer who simply has a pre-qualification letter.

• Exactness – Being given a loan pre approval, you are also provided with calculations of the mortgages, property taxes and all other fees you have to pay. This gives you a clearer picture of the financial responsibilities you have to make and warns you to be prepared for them.


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