What document is typically used to confirm buyer financing in a real estate transaction?

A Pre-Approval Letter is the document that confirms buyer financing in a real estate transaction. This letter is issued by a lender after reviewing the buyer's financial situation, including income, credit score, and debts. It indicates that the lender has conditionally approved the borrower for a mortgage up to a specified amount, giving sellers confidence in the buyer's ability to secure funding and complete the purchase.

While a Buyer’s Financial Statement provides an overview of the buyer's finances and can assist in understanding their financial capability, it does not serve as formal confirmation of financing readiness. A Mortgage Agreement, on the other hand, is a legal document executed after the buyer has secured a loan but does not indicate pre-approval status. Similarly, a Loan Commitment is a formal offer from a lender to provide a loan but typically comes after the buyer has made an offer on a property and is further along in the financing process.

Thus, the Pre-Approval Letter serves as a vital tool in real estate transactions, highlighting the buyer's readiness and strengthening their position when negotiating with sellers.