I’m starting to see more of a dirty little secret not often discussed in the mortgage and real estate industry. It however is is starting to pop it’s ugly head more than usual and I have a feeling our current market environment has something to do with that.

I’m talking about “Pre-Approval Letters” and what they REALLY mean.

While researching this issue, I came across a post written by Rhonda Porter titled “Pre-Approval Letter Defined.” Rhonda is a top mortgage originator in the State of Washington and in her Blog she wrote a very clear and concise article about Pre-Approval Letters.

Pre-Approval Letters are something hardly ever mentioned in the press, however in the mortgage and real estate community, it is a topic hotly contested and subsequently has caused issues on numerous real estate transactions. On countless occasions, Realtors, builders and clients have received a pre-approval letter and late in a transaction find out the borrower does not qualify. In many cases, the subject borrower has already moved out of their previous home/apartment, the individuals they are buying the home from have done the same and the home they are buying is dependent upon their buyers getting financing to close. In essence, there is a domino effect with many transactions dependent upon the down line escrow to close.

Sound familiar?

Bottom line; borrowers need to understand what their”pre-approval letter” is and:

  1. Their Pre-Approval Letter is only as good as their Mortgage Professional (not always the one who gives them the lowest rate/costs).
  2. They are selective about the lender and pre-approval letter they accept.
  3. Have them read Rhonda’s Blog – “Pre-Approval Letter Defined

Below are a few other sites related to pre-approval letters:


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