Regardless of the stage your most recent acquisition is in, whether it’s recently razed or ready for an open house, at some point you’ll be presented with an offer. Sooner rather than later, right? And unless it’s a cash offer (your favorite) the buyer will obtain a loan from their mortgage company or bank. To solid preapproval lettersmake sure the offer is backed with a valid mortgage approval, what can you do to find out if indeed the buyer is as qualified as presented?

 

Your first inquisition regards the lender. If the offer doesn’t carry with it an accompanying loan preapproval letter with a lender’s letterhead and contact information on it, you need more evidence other than the buyer’s claim. If there is such a letter, examine the letter and see what the lender reviewed before drawing up the preapproval. A solid preapproval letter will highlight everything the lender reviewed prior to providing the letter to the buyer.

The lender’s letter should state that the buyer’s credit report has been reviewed and credit scores are sufficiently high as well as claiming that income has been verified. Lenders should request copies of recent paycheck stubs and income tax returns to validate income and the letter should state what documents were reviewed to issue the preapproval.

And finally, the letter should state that the borrower’s application has previously been submitted through an automated underwriting system for the approval and all that is needed is a property address—yours.

With all this, you’re not allowed to see a buyer’s credit report or income tax forms without the buyer’s permission. It’s really not necessary from your perspective, all that you need to know is that the lender has documented the approval. You can ask to see a credit report, but the buyer is under no obligation to provide it to you. If there any questions about the validity of the letter, contact the loan officer listed on the letter to get your concerns addressed. Due to privacy issues, you can’t know everything, but you can certainly know enough.