Boston Real Estate for Sale

Boston condos and per-approval letter 2018

One of the most misunderstood terms in Boston real estate is the difference between a “Pre-approval” (sometimes referred to as “Pre-qualification” or “preliminary loan approval”) and a “loan commitment”. Knowing the differences between the two will help you avoid unpleasant surprises when you are in the process putting in an offer on a Boston condominium.

I recently spoke with a Boston condo buyer that was interested in a listing he saw on my Boston condo website. When I asked if he was pre-approved for a condominium loan he told me that he didn’t want to get per-approved because it would lower his credit score.

I told him that he was overreacting. A credit score may have a temporary hit after several inquiries although an inquiry is not an application for credit. This first time buyer told me “that’s not what he heard” and that he didn’t want to get a per-approval every time he viewed a property. I told him one letter is all you need and you don’t need one for each property you view.

Let’s make this clear what the difference is between per-qualification and commitment letters. The pre qualification letter, informs sellers and their brokers based upon the information received, the lender is indicating that the applicants’ financial, credit, and income information appear to support then for the loan amount listed on pre-approval letter. It is not a loan commitment. A loan commitment may be issued following the applicant’s consent to move forward with the loan.

Mortgage commitment letters

A loan commitment requires a verification of your ability to pay the mortgage (real estate loan). This process includes such items as your income, employment history, assets and credit score. It also requires the review of the Boston condo itself, such as the value and condition of the property, the status of title to the property and a property appraisal to list just a few items.

The next question, many Boston condo buyers ask: Do most per-approvals result in loan commitments? Assuming the lender is diligent during the pre-approval process, yes. However, it is not uncommon for a consumer to receive a per-approval and then find out later that the per-approval was subject to conditions the consumer could not meet, thus prohibiting them from receiving the loan, or forcing them to accept a loan at a higher interest rate or lower loan amount.

If you’d like more information please feel free to contact Ford Realty at 617-720-5454.

Back to Boston condos for sale homepage

Contact me to find out more about Boston condos for sale or to set up an appointment call/text 617-595-3712.

Boston condos

Boston condos for sale


For more information please contact one of our on-call agents at 617-595-3712.

Updated:  1st Q 2018

Call Now