Using Your Pre-Approval Letter
A pre-approval letter is an official document from your lender stating what size mortgage you may secure. Pre-approval is a strong indicator of your ability to purchase a home contingent upon the appraisal, purchase contract and other related factors.
What does my pre-approval letter include?1
- Type of mortgage (30-year fixed, 15-year ARM, etc.).
- Maximum loan amount.
- Maximum purchase price, based on loan + down payment.
- Expiration date (after this date, a new pre-approval would be required).
How do I use my pre-approval letter?
- You may choose to share it with your real estate agent to ensure that you are looking at properties within your target price range.
- While you are not required to share the actual letter with the listing agent, your real estate agent should indicate the presence of such a letter when negotiating the price.
- The pre-approval letter will be provided to the listing agent and their client when signing a purchase contract.
Do I need to show my pre-approval letter when attending an open house or visiting a listed property?
- It’s certainly a good idea to have your pre-approval letter with you for reference. However, you may not want to “show your hand” by providing a listing agent with the pre-approved amount.
1 A typical pre-approval letter includes the items listed above. However, your actual document may include fewer or additional items.