Typical Home Loan Pre-Approval Mistakes Made by Home Buyers

A pre-qualification letter or a loan pre-approval is typically a requirement for many real estate agents when there’s a buying offer to be put down. This is despite the fact that those letters don’t really do much and hold little to no weight in actual purchases! 

Loan approval letters simply reaffirm the possibility of giving a home loan, which is contingent on the borrower’s finances being validated. At most, the loan pre-approval letter is proof of good credit standing and the intent of the buyer to actually purchase a house. It does nothing to affect the home loan rates, for example.

All of that said, however, the loan pre-approval letter can help fortify why the seller should absolutely accept your offer. Done poorly, it could lead the seller to flat-out reject your offer! It all depends on the intent and actual impression given out.

What Are Typical Home Loan Pre-approval Mistakes Made by Home Buyers?

One of the last things you want to happen is for the seller to end up with reasons to reject your offer. Or, if they don’t flat-out reject you, they may at least have reason to want a higher price and make a counteroffer that reflects as much! 

Read on for some typical home loan pre-approval mistakes that homebuyers make so you can avoid them:

Acquiring a Loan Approval Letter from a Sender That’s Unknown

It’s far easier for listing agents to deal with things if they have a familiarity with the lender that issued you a loan pre-approval letter. If the lender isn’t an entity that has some sort of name established, they could get nervous since they may not be able to trust the said lender! Like most industries, there are also mortgage lenders in the business that are simply fly-by-night. They may try to offer the best mortgage rates in theory and end up not having the best interests as they provide borrower loans. 

The idea is that when they’re in closing mode, the borrower may end up with no other recourse than to meet the renewed terms and conditions. In truth, the closing gets walked away from entirely by the borrowers instead.

Look into qualified mortgages through pre-approval. Those mortgages have little risk because their features are stable. 

Submitting a Pre-Approval Letter for a Loan That’s Higher Than the Price on Offer

It’s crucial that the pre-approval letter you end up getting from your lender only has the amount you’re ready to spend. When you work with the right lender, your letter can be tailored according to the offer you want to make. Should you send a pre-approval letter with a clear indication that you’re able to afford more than the price you’ve got on offer, then you basically give the seller a clear pathway to making a counteroffer because they will then have a reason to attempt to raise the price higher.


Loan pre-approval is a crucial part of any home buying process, whether for first-time buyers or otherwise. It’s important to make sure that the correct loan pre-approval letter is sent out. Typical mistakes include submitting a pre-approval letter with a price higher than the offer and acquiring a pre-approval letter from an unknown sender.

Are you looking to apply for a home loan in Bellevue? Get in touch with paloRATE today! We aim to provide home loans to our clients while providing them with competitive interest rates and closing costs.