PreQualification Vs PreApproval



Pre-Qualification vs Pre-Approval…What is the difference and when is it needed?

First things first:

Sellers are advised not to accept a Buyers offer unless they have a minimum of a Pre Qualification letter included with their offer.  The Sellers Realtor may even call your lender to find out how much information you have provided the lender and if you are a strong or weak candidate for the loan stated on your offer.    Some Sellers will require the Buyer to do a back up Pre-Qualification from a local lender, although you may use your lender of choice.  

In a competitive market you want your offer to be stronger then other Buyers.  Sellers prefer the Buyer that is PreApproved.

Pre-Qualified and Pre-Approval are different degrees or levels of loan approval that can have a big impact on your offer being accepted.  Prequalified is the lower level of approval which results in some offers not being accepted and high numbers of people getting denied a loan while in Escrow.   

A pre-approval letter is more reliable than a pre-qualification letter. Getting a pre-qualification letter is easy. You just call a mortgage broker or lender, provide some basic financial information, then wait a few minutes for the letter to come through your fax machine. Getting a "pre-qual" from a Web site is just as easy. Enter some information, click "submit" and voilà. A pre-approval letter, on the other hand, involves verification of the information. Rather than taking your word on faith, the lender will ask for documentation to confirm your employment, the source of your down payment and other aspects of your financial circumstances. Granted, a pre-approval is more time-consuming (and possibly more stressful) than a pre-qualification The additional due diligence is exactly why the pre-approval carries more weight.

http://www.realtor.com/basics/buy/looking/preapp.asp

  

*Talk with a Lender Prior to viewing homes and get Pre-Approved 

 

               Here is more information on the difference betwee Prequalification and Preapproval.

Pre-Qualification

Pre-approval