What the Pre-Approval Letter Drafter actually produces

[LENDER LETTERHEAD] [DATE] MARCUS & JENNIFER CALLOWAY [BORROWER ADDRESS] [CITY, STATE ZIP] RE: PRE-APPROVAL LETTER — RESIDENTIAL MORTGAGE LOAN Dear Mr. and Mrs. Calloway: We are pleased to inform you that you have been pre-approved for a residential mortgage loan in the amount of $485,000 for the purchase of a single-family residence. PRE-APPROVAL DETAILS: Borrowers: Marcus & Jennifer Calloway Loan Amount: $485,000 Property Type: Single-Family Residence Estimated Loan Term: [Verify — typically 30 years for purchase] Credit Profile: Strong — Mid-FICO score 762 Debt-to-Income Ratio: 34% (within acceptable guidelines) Verified Gross Monthly Income: $14,200 Employment History: 24 months consistent employment Current Credit Status: No bankruptcies or foreclosures This pre-approval is valid for [60–90 days — verify your institution's standard expiration period] from the date of this letter, subject to the conditions outlined below. CONDITIONS OF PRE-APPROVAL: This pre-approval is subject to satisfactory completion of the following: 1. Satisfactory Appraisal: The subject property must appraise at or above the purchase price. 2. Clear Title Search: A clear title search and title insurance commitment must be obtained, showing no liens or defects that would impair the lender's security interest. 3. Verification of Funds: You must provide verification that you have sufficient funds to close, including: • Down payment of $97,000 (20% of purchase price) • Estimated closing costs of approximately $9,400 • [Verify exact closing cost estimate in the Loan Estimate document] 4. No Material Change in Financial Status: Your employment, income, and credit status must remain substantially unchanged from the date of this letter through the date of loan closing. 5. Final Underwriting Approval: Your file must receive final underwriting approval by [lender name] underwriting department prior to closing. 6. Homeowners Insurance: A homeowners insurance binder (showing the lender as mortgagee) must be provided prior to closing. 7. Loan Program and Terms: The actual loan program, interest rate, APR, and closing costs will be provided in the official Loan Estimate, which you will receive within three business days of application [verify against TRID/CFPB timeline requirements]. NEXT STEPS: 1. Once you have identified a property, forward the purchase agreement to our office. 2. We will order the appraisal and title search immediately upon receipt of your offer. 3. You will receive a Loan Estimate within three business days [verify your lender's delivery timeline], detailing all costs, rates, terms, and final approval conditions. 4. Close on or before [closing date — verify — typically 30–45 days from offer acceptance]. 5. Contact us if you have any questions or if there are changes to your financial situation. IMPORTANT NOTES: — This pre-approval does not constitute a loan commitment or final approval; it reflects preliminary underwriting based on the information provided. — Final approval is contingent upon satisfactory appraisal, title, and underwriting review. — Interest rates and loan terms are subject to market conditions and specific loan program requirements. — Any significant changes to your credit, employment, or income may affect this pre-approval. — This letter is valid for [60/90 days — verify standard duration] and will expire on [DATE]. CONFIDENTIALITY AND USE: This letter is confidential and intended for use by you and your real estate agent(s) in connection with your home purchase. It is not transferable and may not be reproduced without written permission from [lender name]. We are excited to help you achieve your home ownership goal. Please contact us if you have any questions or if we can provide any additional information. Sincerely, [LOAN OFFICER NAME] [LOAN OFFICER TITLE] [LENDER NAME] [LOAN OFFICER PHONE] [LOAN OFFICER EMAIL] [LENDER NMLS #: verify and insert — do not invent] Enclosure: [If applicable, include pre-approval checklist or next-steps summary]

CONDITIONS AND CONTINGENCIES SUMMARY FOR MARCUS & JENNIFER CALLOWAY Your $485,000 pre-approval is contingent on the following conditions being satisfied before closing: 1. APPRAISAL What it is: An independent third-party appraiser will evaluate the property to confirm its market value. Why it matters: The lender needs assurance that the property value supports the loan amount. Your action: None required — the lender orders the appraisal. Property must appraise at or above your purchase price. Timeline: Typically 5–10 business days after order. 2. TITLE SEARCH & TITLE INSURANCE COMMITMENT What it is: A title company will search public records to confirm you have clear ownership rights and identify any liens or encumbrances on the property. Why it matters: The lender requires a clear title to secure the mortgage. Your action: Coordinate with your real estate agent/title company. If title issues arise, they must be cleared (paid off) before closing. Timeline: Typically 5–10 business days after order. 3. VERIFICATION OF FUNDS What it is: You must prove you have sufficient money in the bank to pay the down payment ($97,000) and closing costs (~$9,400). Why it matters: The lender confirms you can actually close the transaction. Your action: Provide recent bank statements (typically 2 months) showing available funds. If funds come from a gift, provide a gift letter. Timeline: Required before final approval; submit as requested. 4. NO MATERIAL CHANGE IN EMPLOYMENT, INCOME, OR CREDIT What it is: Your financial situation must remain stable from now until closing. Why it matters: The lender approved you based on your current credit score, income, and employment. Changes could affect approval. Your action: Do NOT change jobs, take on new debt, miss payments, or make large purchases (especially cars) between now and closing. Inform your loan officer immediately if your employment changes. Timeline: Ongoing from approval through closing. 5. FINAL UNDERWRITING APPROVAL What it is: After appraisal, title, and fund verification are complete, the lender's underwriting team issues a final "clear to close" decision. Why it matters: This is the formal commitment to fund your loan. Your action: Respond promptly to any requests for additional documentation from the underwriter. Timeline: Typically 3–5 business days after all conditions are submitted. 6. HOMEOWNERS INSURANCE BINDER What it is: Proof of homeowners insurance coverage, with the lender named as "mortgagee" on the policy. Why it matters: The lender requires the property to be insured against loss. Your action: Contact an insurance agent and provide proof of coverage (binder) before closing. Timeline: Usually 2–3 weeks before closing; final requirement before "clear to close." 7. LOAN ESTIMATE AND FINAL LOAN TERMS What it is: You will receive an official Loan Estimate document detailing your interest rate, APR, monthly payment, and all closing costs. Why it matters: This is your official disclosure of the terms and costs you'll be paying. Your action: Review carefully. Ask questions if anything is unclear. This is the reference for all numbers discussed. Timeline: Within 3 business days of application [verify against TRID timeline]. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ KEY DATES TO REMEMBER: • Pre-approval valid until: [DATE — 60–90 days from letter date] • Property offer deadline: [To-be-determined once you find a property] • Appraisal ordered: [Within 1–2 days of offer acceptance] • Loan Estimate delivery: [Within 3 business days of formal application] • Title commitment delivery: [Within 5–10 business days of order] • Underwriting review complete: [Typically 3–5 business days after conditions met] • Clear to close: [Issued when all conditions satisfied] • Closing date: [Typically 30–45 days from offer acceptance] ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ IF A CONDITION IS NOT MET: If any condition cannot be satisfied (e.g., low appraisal, title defect, job loss), the lender may: • Request additional information or clarification • Modify the loan terms (e.g., lower loan amount if appraisal is low) • Require the issue to be resolved before closing • In worst case, deny the loan If you encounter any issues, contact your loan officer immediately — do not wait. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ QUESTIONS? Contact your loan officer: [NAME, PHONE, EMAIL] Or the lender's customer service: [PHONE, EMAIL] Congratulations on your pre-approval. We look forward to closing on your home!