Are Mortgage Pre-approvals Required for Offers in LA?

According to the California Association of Realtors (C.A.R) Residential Purchase Agreement (RPA-CA rev 12/18), home buyers have a three day deadline after acceptance of an offer to provide a pre-approval from their lender. 

However, let’s look at how you can gain a competitive advantage on getting your offer accepted in today’s market by being prepared earlier with a mortgage pre-approval in Los Angeles.

What exactly does the pre-approval deadline mean?

Home buyers have three days to provide a pre-approval letter from their lender, however as an experienced Realtor will advise you, buyers should provide their pre-approval letter at the time they submit an offer. 

Including a pre-approval letter with an offer will give you a competitive advantage over other buyers that do not submit their pre-approval letter and will do so, according to the contract within three days after acceptance. 

Being prepared with the necessary documents shows to the seller that you are a serious buyer. This is especially true for first time home buyers.

Additionally, when you use an experienced Realtor with Prevu, our team works closely with the lender to have them call the listing agent and explain how your loan will be closed in a timely manner. It helps to have the loan officer call the listing agent and "sell" your loan to the listing agent so they can convey this information to the seller. 

The loan officer should explain that your credit, income, down payment and closing costs have been thoroughly verified. This crucial call could mean the difference between getting your deal accepted or not.

What’s the difference between a pre-qualification, pre-approval, and approval?

Pre-qualification

A mortgage pre-qualification means that you have spoken to a loan officer and based on the information provided verbally or digitally, you have been prequalified for a home loan.

Pre-approval

A mortgage pre-approval means that you have submitted income verification to your loan officer. This usually includes two years of W2 and the last two pay stubs. If you are self employed, the loan officer will want to see two years of tax returns (1040’s) and a year-to-date (YTD) profit and loss (P&L).

Your loan officer will also want to verify the source of the down payment, typically they want to see the last two months of bank and brokerage statements.

They will also need to run your credit report and verify that your credit score meets the underwriting guidelines based on the loan product you are seeking to qualify for.

Approval

An approval letter from your lender is the best type of letter to receive from your loan officer. The approval letter acknowledges that an underwriter from the mortgage company has reviewed and verified all the information for your home loan.

An approval letter is almost like a "cashier’s check". You have been approved for your mortgage loan and it can empower you to submit your offer without a loan approval contingency.

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Prevu Real Estate, Inc. is a licensed real estate broker in California, license number 02134758.