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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Gary Burton who wrote (86907)	8/24/2007 12:18:37 PM
From: GraceZ	Respond to of 306849

would your lender not still be 'required' to go through with the deal becuase buyer in good faith had depended on the letter that bank WOULD advance the funds on closing? (not talking rates here) A pre-approval letter is not a guarantee that you'll get a loan by any stretch. All the pre-approval letter implies is that you've gone through the preliminary steps necessary to apply for a loan (you have disclosed your financial condition, etc.) and if all things are equal (your situation doesn't change, the underwriting situation doesn't change) and that you live up to their requirements for a loan of a certain amount at a certain rate. A rate change can change your ability to pay the loan so rates matter in that a higher rate will make you less eligible for the maximum amount. Even someone who has a lock on rates and whose application has been accepted with a sale contract can be kicked out on changes in underwriting standards. This is why most buyers who require financing make offers contingent on receiving that financing. A pre-approval letter makes the seller more apt to accept that contingency.