What Is A Pre-Approval Letter And Why Do You Need It?

By now, you’ve undoubtedly heard us talk about Accunet’s Rock-Solid Pre-Approval. That’s great, but beyond knowing that it’s essentially a beginning step in the home-buying process, what exactly are these letters, and more importantly – why do you need it?

In its most basic definition, the pre-approval letter is a document that a prospective home-buyer obtains from a mortgage lender, bank, credit union, etc., that lets the seller know that the hopeful buyer will be able to garner enough financing to buy the house.

It’s basically a safety precaution for sellers that allows them to be confident in accepting the buyer’s offer, but it’s important not to confuse it with pre-qualification which is just an informal gauge of how much house a buyer can potentially afford.
 

Determine how much house you can afford on your salary with Accunet’s homebuying calculator.

Before rushing off to just any lender, however, it needs to be emphasized that not all pre-approval letters carry equal weight. Beware of any lenders that only issue a credit verified pre-approval. This letter is really just surface level, taking a look at your credit score, outstanding debts and loans.

The big difference between a credit verified pre-approval and a more extensive pre-approval letter, like Accunet’s Rock-Solid, is that the latter verifies not only credit but also your down payment, income, and debts upfront.

With only a credit verification, there is a much larger potential for issues during underwriting since down payments, income, and debts are only documented – not verified.

At the end of the day, a pre-approval letter is trying to instill confidence in the seller that you, as a buyer, can get the proper financial backing without any surprises along the way that could deter the sale. And the best way to position yourself to give that confidence? It’s an all-encompassing Rock-Solid Pre-Approval.