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Old 06-01-2011, 12:10 AM
 
284 posts, read 617,642 times
Reputation: 77

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Hi,
It has been a while since I purchased my last house.
If I were about to make an offer, do I need a pre-qualification letter or pre-approval letter?

I thought I need a pre-approval letter, however, my assumption was that pre-approval letter is free (my realtor pointed me to a mortgage originator and told me it would be free, but I don't want to use him. I think my previous realtor was from weichert and they had people in-house to do the credit check). However, from everything I checked, it seems that pre-approval requires me to begin the application process, i.e. pay the application fee etc..

Mortgage Pre-Qualification vs Pre-Approval

In my case, I am thinking to refinance and pay cash for my second house, hence it does not make sense for me to pay for a pre-approval letter, but then I don't want to begin the refinance until my offer is accepted.

Is there anyway to get around this? Besides the mortgage originator recommended by my realtor, how can I get a free pre-approval letter?
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Old 06-01-2011, 08:30 AM
 
177 posts, read 448,314 times
Reputation: 68
Pre-approval is absolutely free, you shouldn't pay a dime for it.
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Old 06-01-2011, 08:40 AM
 
20 posts, read 37,240 times
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pr-approval is free
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Old 06-01-2011, 09:57 AM
 
Location: New Jersey
219 posts, read 542,214 times
Reputation: 114
Quote:
Originally Posted by anna_mom View Post
In my case, I am thinking to refinance and pay cash for my second house, hence it does not make sense for me to pay for a pre-approval letter, but then I don't want to begin the refinance until my offer is accepted.

Is there anyway to get around this? Besides the mortgage originator recommended by my realtor, how can I get a free pre-approval letter?
You can refinance and pay cash for the new home but you don't want to pony up for a Seller's feel good letter?

No offense, but that just shocked me. Anyway most Sellers will look at a pre-qualified letter with little regard when considering an offer, and they are free (which is why they aren't given much weight). A firm pre-approved letter is hard to get unless you have the specifics of the property being considered. Many lenders (for a fee to cover processing) will issue an open or conditional pre-approved letter, which often depends on locating the property and having it appraise for a certain amount.
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Old 06-01-2011, 10:11 AM
 
1,787 posts, read 5,753,686 times
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To refinance costs money; can you get a home equity line of credit to pay for the second home? This won't cost you anything and you'll get an approval letter stating the approved amount.
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Old 06-01-2011, 09:08 PM
 
284 posts, read 617,642 times
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Quote:
Originally Posted by timneh5 View Post
To refinance costs money; can you get a home equity line of credit to pay for the second home? This won't cost you anything and you'll get an approval letter stating the approved amount.
Interesting.
The realtor also mentioned home equity line of credit.
I never thought about it.
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Old 06-01-2011, 09:29 PM
 
Location: NJ
17,573 posts, read 46,185,854 times
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I always just used a pre approval. Never had an issue from sellers.

Question. How exactly would you write up the contract from a financing standpoint? If you say you are paying cash the sellers will most likely want proof you actually have the cash.
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Old 06-02-2011, 03:49 PM
 
284 posts, read 617,642 times
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Quote:
Originally Posted by manderly6 View Post
I always just used a pre approval. Never had an issue from sellers.

Question. How exactly would you write up the contract from a financing standpoint? If you say you are paying cash the sellers will most likely want proof you actually have the cash.
My initial plan was to use a pre-approval letter with proof of funds to make an offer. If the offer were accepted, I will begin to apply for refinancing...I do not see a problem with refinancing ..
thoughts?
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Old 06-02-2011, 04:02 PM
 
Location: NJ
17,573 posts, read 46,185,854 times
Reputation: 16279
Quote:
Originally Posted by anna_mom View Post
My initial plan was to use a pre-approval letter with proof of funds to make an offer. If the offer were accepted, I will begin to apply for refinancing...I do not see a problem with refinancing ..
thoughts?
How are you going to provide proof of funds if you haven't refinanced yet?
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Old 06-02-2011, 07:50 PM
 
10,224 posts, read 19,245,513 times
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You don't need proof of anything to make an offer, and in this market I can't see a seller demanding too much. You might as well get the free pre-qual, after all it is free. Normally there's a contingency in the contract about obtaining financing, so if it falls through you can back out with no harm done.
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