On a weekly basis, I get at least one call with an immediate need for pre-approval letter. There’s just one problem, pre-approval’s don’t exist in the world of commercial and investment property financing. Realtors often perpetuate the idea of an all-encompassing pre-approval letter, presenting it as the golden ticket for real estate investing, akin to Willy Wonka's invitation in Charlie and the Chocolate Factory.
While it is true, those shopping for a primary residence can get pre approved or pre qualified for a property or dollar amount prior to shopping for a home. Those investing in real estate need to undergo more stringent underwriting. Investors applying for a commercial bank loan are required to submit three years of tax returns, personal financial statements, debt schedules, along with the subject property’s financials, all of which are combed through with a fine-tooth comb prior to a lender issuing a contingent approval. The contingent approval is still subject to satisfactory appraisal and clean title work. Between contingent approval, appraisal, title work, and closing, anything can happen. The deal is never “pre-approved” or fully “approved” until you receive a clear to close.
With a Focus DSCR loan borrowers aren’t required to submit tax returns, debt schedules, or personal financial statements. Although our process is streamlined in comparison to commercial banks, we still require satisfactory appraisal and clean title work before we can consider the loan approvable. Loans aren’t fully approved until a clear to close has been issued between the funding department and the title company.
As an investor, next time your asked for a pre-approval letter provide them with a copy of your Focus DSCR Applicant letter. The applicant letter shows that you are in the process of obtaining financing for the property using a streamlined investor DSCR loan.
If you would like an applicant letter you can obtain one here: https://www.focusdscr.com/applicant-letter
If you have any questions or would like to speak with a loan officer, please call 614-362-8701
Disclaimer: Not Financial or Investing Advice
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