A preapproval letter provides documentation of exactly how much mortgage you have been approved to borrow. And this documented evidence shows both Realtors and sellers that you are serious in your pursuit of a property. A preapproval letter can make a big difference for homebuyers.
What’s included in a preapproval letter?
Here are the items typically included in a preapproval letter:
- Loan program
- Loan type
- Loan amount
- The purchase price
- The qualified interest rate
- How long the preapproval offer will last
An important aspect to all preapproval letters is that a preapproval letter doesn’t guarantee a home loan. The items specified in your preapproval can change for several reasons, including: your financial situation changes (you incur more debt, lost your job, etc.), the appraisal comes in lower than estimated, there was an issue with the title search on the property.