Northbay Family Homes

Mortgage PreApproval Letters

What is a Mortgage PreApproval Letter?
A Mortgage PreApproval Letter is an important "shopping" tool for prospective homebuyers giving them a clear picture of what they can afford and adding financial "clout" to their purchase offers.

What is the difference between a PreQual and a Mortgage PreApproval Letter?
Mortgage PreApproval Letters differ from a simple PreQual in several ways. A PreQual is an indication or estimate of what a prospective buyer might be able to afford. But, the projected loan amount is based on unverified income, asset and credit information and is usually not in writing.

A Mortgage PreApproval Letter, on the other hand, is a fully processed loan (except for the property appraisal). The lender has reviewed and verified all the information on a Standard Loan Application (1003) to confirm the accuracy of the prospective buyer's income, assets and credit. Assuming things don't change in the interim, and that the appraisal supports the purchase price once a purchase offer is made, the buyer, seller and brokers involved all have reasonable assurance that lender will make the loan.

What are the benefits of a Mortgage PreApproval Letter?
A Mortgage PreApproval Letter eliminate uncertainty and elevate the stature of a purchase offer. Prospective buyers can:

  • Establish a maximum purchase price and monthly payment to simplfy and focus their search to a specific price range.
  • Gain financial "clout" to get their purchase offer accepted. A written Mortgage PreApproval Letter from a recognized lender elevates the purchase offer and eases the seller's concern that the buyer might not qualify.
  • Eliminate uncertainty and false starts. Knowing where to focus the home search efforts and knowing in advance that there are no major income, asset or credit issues to derail and disappoint gives buyers the confidence to move forward.
  • Once a Mortgage PreApproval Letter has been issued, NFH will reset your My HomeBuyer Alert preferences to simplify your search. When a home appears on the market that is within the PreApproved limits, you can take immediate action to visit the property and make an offer (See Real Estate Services).

Am I assured of getting the loan with a Mortgage PreApproval Letter?
Nothing can be guaranteed, but you will be much closer to getting your offer accepted and closing your loan with a Mortgage PreApproval Letter. Be aware, however, that the property you select must appraise for the purchase price. Also, if interest rates have risen, your total loan amount may be reduced. And, the lender will update your income, asset and credit information to make sure there have been no changes. The Mortgage PreApproval Letter will contain other conditions and exceptions that you should review. All that said, a Mortgage PreApproval Letter will put you in the very best negotiating position.

Who provides my Mortgage PreApproval Letter?
Northbay Family Homes participates with national, regional and local Alliance Lenders who review Loan Applications and issue the Mortgage PreApproval Letters. Northbay works directly with you through a One-on-One loan interview to develop a basic information package and credit file to present to the Lender.

What is an Alliance Lender?
An Alliance Lender is an experienced mortgage lender that offers loan programs (sometimes with Affordability Features) appropriate for first time buyers and workforce families. Alliance Lenders have experienced lending teams and are able to offer specialized assistance for Northbay Family Homes buyers. Alliance Lenders currently include Bank of America, Well Fargo Bank and Redwood Credit Union.

To Learn more about other activities of Northbay Family Homes, visit our organizational website at


Northbay Family Homes