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Jennifer Buchanan

Pre-qual vs committment letter

Wednesday, March 30, 2011 - Article by: Jennifer Buchanan - MetLife Bank - Message

A prequalification letter generally states that you have spoken with a loan officer, verbally given them your financial information and once your information is verified it is most likely you will be issues a mortgage commitment to lend. In other words, you have given information and once it is confirmed it is possible you will be given a mortgage.

A mortgage commitment to lend means that you have provided a copy of all the necessary financial documents, the mortgage underwriter has reviewed your documents and approved your mortgage application.

In today's market, the prequalification - or pre-approval letter is proving time and again not good enough to become the winning bidder on a home. If you are serious about purchasing a home, having a mortgage commitment will make you a much more attractive buyer.

Most recently I worked with an extremely well qualified buyer who chose not to provide the documents, made an offer with a pre approval letter and lost their dream house in a multiple bid situation to a buyer who had a commitment to lend. There are more and more loan officers with the same story these days. Today's sellers have been waiting a long time in most cases for a purchase offer. Once the seller has accepted your offer, their house is essentially off the market until all the inspection, appraisal and loan approval dates have been met - and if they must wait an additional 3 weeks for a mortgage approval with a pre qualification versus an offer with the only the requirement of an appraisal, the smart seller will take the appraisal only offer.

There is no cost or obligation to have a completed commitment to lend - and sooner or later you must provide the documents. If you are serious about purchasing a home, and want to have your offer accepted, ask for the full commitment to lend when you apply for a mortgage. The financial documents needed include; your most recent pay statement, 2 most recent asset statements, 2 most recent W2's or 1099's and 2 years complete tax returns.

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