Pre-approval shouldn't be confused with the less stringent prequalification, which provides a quick assessment of what you might be able to afford, usually based on unverified financial information you provide.
With pre-approval, lenders will thoroughly review your earnings, assets, and credit scores to determine exactly how much you can borrow and which loan is best for you. This can take a few hours to a few days. "You need two months of bank statement, two pay slips, and two years of tax returns," said Mark Yecies, owner of SunQuest Funding in Cranford, N.J.
Both Mr Barry and Mr Yecies state that they provide letters of approval for any property that a buyer makes an offer on.
Waiver of contingent liabilities
Contingent clauses allow buyers to withdraw from a contract if certain conditions are not met. However, many sellers view them as barriers to selling, and nowadays they are more likely to accept an offer with fewer or no contingent liabilities.
The most common is the mortgage contingency which allows you to get out of a deal if you cannot secure the financing of the property. Angela Dooley, a Compass agent on the north coast of Long Island, said, "You could finish first or second in a bidding war." But not everyone should do that. "Only those who are very, very confident that they will get a mortgage," she said.
Among other things, a contract can be terminated if the estimated value of a home is less than what you are offering, if an inspection reveals certain repair problems, or if you cannot sell your current home.
"A very strong offer will forego all," said Ms. Gosselin, "but there will be things you cannot do and that will be fine." For example, if a valuation is below the sale price, you may not be able to forego the valuation clause because you don't have the money to make up the difference.