As part of due diligence, what financing step should a buyer verify?

• A. Pre-approval status
• B. Seller's mortgage balance
• C. Seasonal utility rates
• D. The listing agent's license number

Answer: (A)

Verifying a mortgage pre-approval status is the key financing step in due diligence. A pre-approval means a lender has reviewed the buyer’s financial documents and credit and is willing to lend up to a specific amount for the property, subject to standard conditions. This sets a realistic price range, signals credible financing to the seller, and strengthens the buyer’s offer. It also helps streamline the financing conditions in the contract, since the lender has already done substantial verification, reducing the risk of the loan not closing.

The other items don’t provide evidence the buyer can actually obtain financing for this purchase: knowing the seller’s mortgage balance pertains to the seller’s debt, not the buyer’s funding readiness; seasonal utility rates are ongoing costs, not financing approval; and the listing agent’s license number is a regulatory detail, not a financing step.