Profile picture for ibcrewin

Pre-approval letters and realtors..

I got a pre-approval letter from a mtge broker X. Using and agent with company X. I changed my search area and found a local Realtor from company Y. Agent from company Y keeps mentioning getting pre-approved from company Y's in house mtge broker. 

A friend of a friend mentioned, forget using a preapproval from company X, or Y. Get one from a major bank like Wells, or BOA. It hold more weight in this market. So, my question is. Can I just stick with the preapproval letter from X, until it expires, then apply again with Wells? Or, option 2, Get 3 different preapprovals. I will shop for a mtge after I find my place, so I'm not really worried about int rates just yet.
  • April 28 2009 - Maplewood
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Answers (8)

Profile picture for CoryUre
An approval letter from Wells Fargo or Bank of America holds no more weight than one from an independent broker since a pre-approval is nothing more than a guarantee from Fannie Mae, Freddie Mac, FHA or VA that they will buy or guarantee the loan if everything you've said so far on your credit application checks-out during the underwriting period.  Also, chances are that your broker is going to submit the loan to Wells Fargo, Bank of American, GMAC, Provident or others anyway for underwriting and funding.
  • August 15 2009
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Profile picture for Robert.Northfield
Please ask your new agent why they keep asking for that since you have one already. It could be that the mortgage company where you obtained the pre-approval is not well known in your new search area.

A pre-approval from a well known lender/bank will hold a lot of weight. A pre-approval from little known small mortgage broker may not be considered strong or leave room for a lot questions.

Good luck with your search
  • August 15 2009
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The simple answer to your question is yes, you can use that letter until it expires.  Be aware that the listing agent for any property you draft an offer on will probably call to check on you ability to obtain a mortgage.  
  • April 29 2009
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The pre-approval letter is just a formality that proves you didn't just drop off the turnip truck, walked up to the house and said "I wanna buy your house"  It's the difference between a tire kicker and someone who shows up with a bundle of cash to the used car lot.

As others of have stated, have the pre-approval letter from a known lender. Some foreclosed properties may require you to be pre-approved with the lender that owns the property, but you are not required to use them as your ultimate lender.

Once you have settled on a property and made an offer, shop around for the best rate. As long as the terms of your financing do not radically differ from what you have stated in the purchase agreement, there usually isn't a problem. However if there are changes to financing (terms and conditions), have your real estate agent convey that info to the listing agent immediately.

Frankly it makes no difference whether you use the in-house loan officer or an outside loan officer. Legally, your real estate agent receives no compensation for recommending an in house lender as opposed to any other lender. He or she may be more comfortable working with a loan officer they know and trust as opposed to the unknown. And sometimes the ability to just walk down the hall with a question is alot easier than making 15 phone calls to an outside loan officer. But it's YOUR choice.

Good luck.
  • April 28 2009
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Profile picture for ibcrewin
I agree with both of you. The plan is to get the tailored preapproval letter to get the contract. Then shop around for the best rate to seal the deal.
  • April 28 2009
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Our market here is extremely fast moving.  Multiple offers are received.  When I present offers on "bank owned" properties on behalf of my clients, I always...(call me for details).
  • April 28 2009
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I get mine tailored. I don't want to go in with a pre-approval letter of $135K when I'm bidding $115K. I am using Wells Fargo and they do this for me as soon as I ask.
  • April 28 2009
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Profile picture for Marc Paolella
I would not use the in-house realtor's lender. Get your own mortgage form an outside source. It keeps everything cleaner.

As far as pre-approval letters, they are not worth the paper they are printed on, however sellers do want to see them.

But it really does not matter at all which institution provides it. As long as it states that you are credit approved, and it's not a total no-name bank, you should be fine.

-Marc
  • April 28 2009
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