The purpose of this blog series is to help you know what the difference is, what you should be asking for based on your circumstances, and to help all parties realize a successful transaction. One of the reasons Listing Agents will review a Lender Letter with a fine tooth comb is because it is a critical component to a seller’s decision to accept a purchase agreement and, in essence, remove their home from the market while the borrower pursues the financing.
There are not many agents who have not had an experience where a borrower produces a lender letter, then as the loan application progresses, something turns out to be different that was a foundation to the expectation indicated in the letter. For an agent and seller, this means lost marketing time or possibly even losing their potential purchase. Because some bit of information was withheld or possibly a loan officer did not ask the right questions, people’s lives could get turned upside down.
Privacy laws will prevent the loan officer, for the most part, from saying anything outside of the content of the letter. Therefore, “trust” and “reputation” of the loan officer and even his or her mortgage company can play a big role in the presumed credibility of the letter and you as a potential borrower. Presumption the loan officer has asked the right questions, proceeded with the correct level of due diligence, or has created a trust relationship with you to be forthcoming and complete with your personal finances, becomes absolutely vital to the success of the transaction.