A preapproval letter may even provide leverage for buyers in multiple-offer situations because their offer is backed up, whereas that might not be the case for the other potential buyer.

The due diligence involved in this process also helps Realtors and sellers deal more confidently with the buyers. Realtors often tend to look favorably upon clients who have preapproval letters because they signal a serious buyer who is intent on purchasing a home. In fact, some agents will not show a property to potential buyers who don't have preapproval letters in hand.

Ultimately, getting a preapproval allows buyers to close quickly when they find a property. It can even help in price negotiations with the seller because being preapproved is close to having cash in the bank to pay for the house.

Accuracy, though, is key. For a buyer to get a preapproval letter, the loan officer must complete a detailed loan application, with assurance that the information is correct as represented.

In the event that the information is minimally verified -- and therefore less-than-accurate -- problems can arise for all parties.

The amount of work it takes to create a preapproval letter is usually a good indicator of its accuracy and validity. If a preapproval letter is created using pay stubs, the most-recent bank statements and tax returns, there should be few concerns. Alternately, if the lender says, "I don't need anything from you" or "I can rubber stamp a letter for you," buyers and sellers should be gravely concerned.

No one should be so eager to get a deal closed that they are willing to take a few shortcuts that could ultimately misrepresent the financial picture or inadvertently quash a deal before it ever comes close to fruition.

A properly prepared preapproval letter, however, can have numerous benefits.

John Osslund, president of West Coast Mortgage in Escondido, Calif., has a simple lending philosophy: "Providing the customer the loan product at a price they are willing to pay, in a timely manner, all the while exceeding expectations!" As president of S.W.I. Financial Services Inc., it is his passion to train and assemble a staff of high-volume originators, adhering to core values of "service with integrity." Reach Osslund at (760) 747-6000, ext. 201, or johno@westcoastmortgage.com.

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