Are You ‘Lead’ing Me On?
A typical lender letter is basically just a Pre-Qualification letter. The content of the letter generally is based on information provided by a loan candidate and specific language that the information has not been supported or verified and the letter does not indicate a commitment or intent to lend. In many real estate transactions, this type of letter is fine. If your profile is stable employment, solid credit history, and your source for down payment and closing costs is easily identifiable…this is probably the right letter and process for you. Agents will typically be more willing to work with Pre-Qualification letters issued by known reputable lenders and loan officers. Unknown lenders or loan officers may result in some scrutiny, but depends on the specific agents and circumstances.
Typically lenders do not want to fill a pipeline full of active loans without real property addresses or fully ratified purchase agreements. It would force them to devote valuable human resources to borrowers who may or may not ultimately purchase a home or even use that lender for actual mortgage transaction once a purchase agreement is executed. It would raise lending costs due to the increased resources and slow the process down for “live” loan applications. Instead, they will tag you as “lead” or some other similar category, do all of the necessary ratio calculations, produce the Pre-Qualification letter and move on to the next call or email while you are completing your home search and /or negotiating your transaction.