In a tight market, preapprovals are needed more than ever to establish the financial bona fides of home purchasers. Unfortunately, preapprovals have also become less reliable, especially for self-employed borrowers.
A preapproval is a statement by a lender that a prospective buyer has the income, assets and credit to be approved for the mortgage required to purchase a house of some assumed value. The statement is an opinion, not a commitment. Realtors frequently recommend that prospective purchasers get preapproved so that home sellers will take them seriously. Probably just as important to Realtors, they don't want to waste time on buyers who can't qualify for the loans needed to complete purchases.
A preapproval letter may be expressed in terms of a ma