How do I know if the buyer will get approved for a mortgage?

Most buyers today get preapproved for a mortgage before they look for a home, especially buyers that work with agents. Agents often require a preapproval letter before showing homes. The buyer should present a preapproval letter on the letterhead of a mortgage lender and signed by a loan officer.

If the buyer does not have such a letter, many sellers will not accept the offer until they have obtained one. Most lenders can provide these letters to a buyer within 1-2 days after the buyer completes the application and submits the required paperwork. Requiring a preapproval letter keeps you as the seller from having to determine whether the buyer will qualify for a loan and makes the process much simpler.

In the 'olden' days of real estate, agents used to pre-qualify buyers before an offer. Times have changed. Buyers refuse/are reluctant to give highly personal financial information to a real estate agent. Even if the buyer would provide the information, the incredible variety of mortgage financing programs available today each have different qualification criteria. As a result, it is a rare agent that knows how and is capable of "qualifying" a buyer. Today agents rely on lender pre-approval letters from lenders.