If you’re looking for an edge in a competitive real estate market, a Verified Approval Letter (VAL)1 signals to sellers that you’re likely to get approval for the mortgage loan amount and terms you need, giving sellers confidence that they’ll likely sell their home quickly by accepting your offer.
So what exactly is a VAL? Let’s take a closer look at how a Verified Approval Letter works and the benefits it offers.
Verified Approval Letter: At A Glance
A Verified Approval Letter is a document from our friends at Rocket Mortgage® that confirms their underwriting team has verified your income, assets and credit. With a VAL in hand, you’ll have a competitive advantage because you can prove to a seller that your finances are secure.
Getting a Verified Approval Letter can also save you time during the mortgage application process as long as there are no changes to your assets, income or credit profile.
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Is A Verified Approval Letter The Same As A Mortgage Preapproval Letter?
Most mortgage lenders offer a “mortgage preapproval letter” or “mortgage approval letter,” but these are just generic terms referring to proof of preapproval.
By contrast, a VAL is the end product of Rocket Mortgage’s Verified Approval process. It indicates that you’ve received preapproval from a trusted lender with a brand name that inspires confidence in sellers. The process includes a credit check and review of other financial information, like your income and assets. Your real estate agent can use a VAL to assure sellers you’re financially stable.
Prequalified Vs. Preapproval Letter: What’s The Difference?
When you begin the home buying process, you need to be aware of your housing budget so you know the loan amount and monthly mortgage payments you can afford. Many lenders will offer prequalification and preapproval letters. Although they sound similar, the letters differ.
What Does Preapproval Mean?
A preapproval means a lender has thoroughly looked through your finances and determined how much they are willing to loan you if fully approved. Formal loan approval happens during the underwriting process.
During the mortgage preapproval process, lenders take a closer look at your finances to verify the information you’ve supplied. They review your salary, credit score, outstanding debts and other financial information to decide how much they’re willing to let you borrow. The lender will issue a preapproval letter (PAL) confirming a maximum loan amount.
Think of a VAL as the Rocket Mortgage version of a PAL.
What Does Prequalification Mean?
A prequalification states how much you “qualify” for based on the information you report to the lender or what the lender learns from your credit report. Prequalification is a less rigorous process that likely won’t provide the same competitive advantage as a PAL if you’re in a fierce bidding war.
Why Do You Need A Mortgage Preapproval Letter?
In today’s housing market, some properties receive several bids, meaning more than one home buyer is competing for one home. Sellers look at each offer to choose the one they think is best for them.
While sellers typically look for the highest offer, the price isn’t the only factor a seller considers. Most sellers want some assurance that the closing will happen swiftly and efficiently, ensuring a successful deal. If a home buyer hasn’t been preapproved, their financing may fall through at the last minute, leaving the seller without a buyer.
Sellers may be less likely to accept offers without a mortgage preapproval letter. Obtaining this document early in the process shows how serious the borrower and the mortgage lender are about the offer.
Get approved to buy a home
Rocket Mortgage®lets you get to house hunting sooner.
What Does The Rocket Mortgage Approval Process Verify?
While most lenders offer a version of the preapproval process, many aren’t as thorough as Rocket Mortgage’s Verified Approval process. Some lenders may only check one of the factors discussed below. Rocket Mortgage verifies all three at the Verified Approval stage.
If a mortgage lender doesn’t verify all your information before issuing the preapproval, it may jeopardize the sale. You may discover you don’t have the financing you assumed you did.
Let’s explore the factors Rocket Mortgage will verify.
Credit History
Your credit history is a crucial factor in determining the home loan amount you qualify for and interest rate you receive from Rocket Mortgage. The way you handled paying back loans in the past is a good indicator of how you’ll handle your future mortgage payments.
While Rocket Mortgage considers other factors like your down payment, a borrower typically needs a credit score that falls in the qualifying range to get the best interest rate for a conventional loan. Not sure what your credit score is? It’s best to check before you start applying so you can improve it if you need to. Find out how to check your credit score.
Income
Your income is another key factor that impacts how much you may qualify to borrow. Rocket Mortgage will verify your employment status and income through your pay stubs, bank statements and W-2s. Verifying your financial documents ensures the amount they’re willing to lend is appropriate for your income.
Assets
Finally, Rocket Mortgage will verify account statements and assets to establish a more accurate picture of your financial status.
What’s Included In A Verified Approval Letter?
Once Rocket Mortgage verifies your finances, the process will move into the letter stage, detailing the amount of money you’ve been conditionally approved to borrow.
Here’s where you can gain the upper hand in negotiations: Even if you’re approved for a larger sum, you can request that the VAL show a smaller sum, which gives you wiggle room to negotiate if you’re in a bidding war.
Let’s say you’ve been approved for $300,000 and want to make an offer on a house listed for $250,000. You can request that the VAL show an approval amount of $250,000, letting you incrementally increase your offer to $300,000 in the case of a bidding war. The seller won’t know your upper limit, but you can adjust to that $300,000 mark when a seller is juggling multiple offers.
Does Getting Preapproved By One Lender Preclude You From Getting Your Mortgage Elsewhere?
Securing preapproval is an important step before house hunting, especially in a competitive market. But you’re not obligated to get your home loan through the mortgage lender that preapproved you. You should compare rates and terms from multiple lenders to make sure you’re getting the best deal for your situation. Even if you’ve already talked with another lender, it’s not too late to check what Rocket Mortgage can offer.
Loan Approval Letter FAQs
We’ve collected a few questions people often ask about mortgage approval letters.
How can a Verified Approval Letter help me?
A Verified Approval Letter sets a home buyer’s offer apart from all the rest – especially in a bidding war. The letter can give home sellers peace of mind that the deal won’t be delayed or fall through, making your bid more attractive than bids from buyers who don’t have a VAL.
How long is a Verified Approval Letter good for?
Your Verified Approval Letter from Rocket Mortgage is valid for 90 days from the date you receive it. If you don’t buy a home during that time, you’ll need to restart the process to get a new VAL. Other lenders may have different windows for their preapproval letters.
How long does it take to get a mortgage preapproval letter?
If you can supply all the required information quickly, a lender will need at least a few business days to review your financial documents and finish the mortgage preapproval process.
What happens after the Verified Approval Letter?
Once you have the VAL, you’re on your way to homeownership. A seller, REALTOR® or real estate agent will recognize that you’ve put in the work and are a serious home buyer. A VAL can help your bid stand out in a competitive real estate market.
Is a Verified Approval Letter better than a preapproval?
Verified Approval involves extra steps, resulting in a more accurate estimate of what you can afford and providing sellers more confidence in your eligibility.
The Bottom Line: A Verified Approval Letter Can Help Your Offer Stand Out
When you’re house hunting, you never want to see a new home slip from your grasp because you weren’t financially prepared to make an offer. That’s why a Verified Approval Letter from Rocket Mortgage or a strong preapproval from another reputable lender can help a potential buyer’s offer stand out to a seller.
Ready to get your own VAL? Start the approval process with Rocket Mortgage. Their Home Loan Experts can answer any of your questions and help you on the path to your dream home.
Get approved to buy a home
Rocket Mortgage®lets you get to house hunting sooner.
1Participation in the Verified Approval program is based on an underwriter’s comprehensive analysis of your credit, income, employment status, assets and debt. If new information materially changes the underwriting decision resulting in a denial of your credit request, if the loan fails to close for a reason outside of Rocket Mortgage’s control, including, but not limited to satisfactory insurance, appraisal and title report/search, or if you no longer want to proceed with the loan, your participation in the program will be discontinued. If your eligibility in the program does not change and your mortgage loan does not close due to a Rocket Mortgage error, you will receive the $1,000. This offer does not apply to new purchase loans submitted to Rocket Mortgage through a mortgage broker. Rocket Mortgage reserves the right to cancel this offer at any time. Acceptance of this offer constitutes the acceptance of these terms and conditions, which are subject to change at the sole discretion of Rocket Mortgage. Additional conditions or exclusions may apply.
