I am looking to get a mortgage pre-approval so I can put myself in a position to make attractive offers to a seller. I completed an application form, send it to the bank and all supporting documents (assets, job letter, W-2, pay stubs etc). The pre-approval was free. Two days later, I got the letter below. However, the wording of this letter looks very strange (it make it look like a pre-qualification as opposed to pre-approval). My realtor said you need to get something more substantial. I said, a credit check was done so this is a pre-approval. I told her to speak with the loan officer to see what actually happened. However, what do people think of this letter? Would a seller frown about seeing this wording? How can this be changed? Thanks for any help.

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Dear X,

Based upon the information provided on 08/08/08 it has been determined that you qualify for a home mortgage in the amount of Y with a sales price of Z based on a rate up to 6.625% and an amortization term of 30 years. You will be responsible for evidencing all monies needed for down payment and closing costs at the time of formal mortgage application.

This pre-approval (underlined) determines your affordability when shoppping for a new home or refinancing.

This pre-approval (underlined) is contingent upon submitting a formal mortgage application that supports the documentation and information previously provided. This does not constitute a mortgage approval or mortgage commitment. This pre-approval was determined based on information provided on a particular date. IF any of hte information has changed a new pre-approval will be needed.

If you have any questions, please contact me a B.

Sincerely,
...

PS: This pre-approval was submitted to Freddie Mac's Loan Prospector and credit was evaluated. This letter is valid until 12/10/2008.

They sent you a pre-qual letter. A preapproval letter should only be subject to issues pertaining to the property, not the borrowers ability to purchase. (exception being that your credit worthiness does not change)

Sounds like they did not verify the data you provided.

So what do I have to do to get a pre-approval letter? I had found a property I was interested in making an offer but its sold yesterday night. So currently I have no other properties I"m interested in making an offer on. Seems like a chicken and egg problem.

I think a lot of lenders are just erring on the side of caution. My customers have been sent through underwriting and still receive the same verbage as a prequal. I asked the LO about it but she says they have changed the rules and won't allow anything stronger even after underwriting approval. It makes me sick but I just have the LA contact her to very.

You will probably find that most lenders will only provide a pre-approval letter that has verbage that contains very basic subject to information. They are going to be vary cautious to give an approval especially in this current market where guidelines constantly are changing. Once you have a property your file can actually be underwritten which takes time and money to accomplish. Once the loan has been underwritten to the property you will get a commitment letter which outlines necessary conditions that must be met to obtain funding.