Mortgage pre-approval letter: how necessary it is to make an offer on a house in the USA

While there are no written rules that force homebuyers to need a mortgage pre-approval letter to make an offer on a home, in today’s competitive real estate market it becomes essential to move forward in the process.

It is a kind of unwritten law to have a mortgage pre-approval letter to make a formal offer to buy a house in the United States. In a strict sense, it is not necessary.

It must be taken into account that the real estate market is very competitive in the country. While buyers don’t need to have a pre-approved mortgage letter to make an offer on a home, the reality is that it puts you in front of any seller’s eyes as a serious and viable option for purchase.

A mortgage pre-approval letter is your guarantee that a lender will give you the requested money to finance your home purchase up to a certain loan amount.

To obtain approval, your lender will request a series of documents such as:

  • Pay stubs
  • Credit scores
  • Federal tax returns, (Form W-2)
  • Investment accounts
  • Residential history

Once the lender reviews your entire financial portfolio, they will decide whether or not to issue you a pre-approval letter.

Getting a mortgage is the usual way that people have to buy a house, it does not mean that all. However, because a high percentage of buyers will purchase the home through a loan, real estate agents prefer to show houses to interested parties with a pre-approval letter , as it is a sign that the person is financially able to pay. to buy. Despite this, the letter is not mandatory to tour the house.

But not being able to see a house is not the worst thing you can face without a pre-approval letter. While the agent may be wasting time with a potentially unsuccessful tour, so can you if you’re hoping to make your purchase through a home loan. Many first-time homebuyers are so excited to start the buying process that they skip necessary steps, and when they find they’re not approved for the amount needed for their dream home, disappointment follows.

Getting a pre-approval letter should be one of the first steps in the home buying process, because it will focus your search around homes you can afford. You will also fill the eyes of the seller, since he will see you as a potential buyer. In the end, both objectives must be combined: him selling his property and you buying it.