By Jim Pendleton - Mr MortgageTM
Pre qualified letter. Vs
Pre approval letter.: What is the difference to you?
Which One is right, What Should You Ask For and what
should it say?
When you look into the fast moving world of real estate transactions, both purchasers and professionals
sometimes use the words “pre
qualified” and “pre approval” interchangeably. By using the wrong word in place of the correct
word, you may find yourself in a very sticky situation. Comparing here between pre qualified letter. to a
pre approval letter. in
detail. Here is the total explanation for you: The problem is, they mean two totally different things.
Now let’s look at how things go when you view things which sometimes work out. Here you are the potential
buyer of a home, ready to make an offer on a house. Now this is when your realtor tells you that you need to get a
“pre qualified” letter. from your lender to submit with the contract. You receive the pre qualified letter.
and give it to your realtor. The letter. is then submitted with the contract and accepted by the seller. Great
news! Or is it? The contract states that you must close within 30 days and you could not be more excited. Now,
let’s fast-forward to day 28. Your lender calls you to let you know that your loan was declined.
You may be when you view things which sometimes wondering how could something like that happen, you ask? You
were pre-qualified! Well, this is one of those times when you must understand what the definition of “is” is.
There are significant differences between being pre qualified letter. and being pre approval letter.. Knowing what
they are beforehand can determine whether you actually close on the transaction or not.
There are many cases that the home seller only found out several weeks later that the homebuyer couldn’t
get the mortgage loan. When this happens, you not only have to let the buyer back off, but also have to refund the
earnest money to the homebuyer. Remember when you are issued pre qualified letter. or pre qual does not
mean the homebuyer can always get a loan. A pre approval letter. from a lender does qualify at a much greater
rate of success. So you need to understand this is the case most of the time, home sellers accepted offers without
asking the question if the homebuyer is qualified with a mortgage lender.
So you are now armed with the pre approval letter. that can help you find the home you are qualified to buy
taking into consideration of a satisfactory review, the credit underwriting is completed. Remember that in today's
times a pre qualified letter. is not enough in today’s market, you need to be approval by a real lender.
When you are serious about getting the house you want, you must understand the difference between these two terms.
If you are considering asking for a pre qualified letter., be sure to stress that you just want a letter. stating
that you are pre qualified for a loan, and that the pre qualified is subject to further review and due diligence,
which a direct lender like us, can do for you.
Let us do this new aspect, which is very important to have that “pre
approval” when you submit the contract. That way you can submit your offer with confidence, knowing that the loan
is ready to go as soon as you get the contract and the appraisal. The process usually takes a little more time, but
that is where a little planning comes in. Give yourself time, so you get started just a few weeks
before you plan to go house hunting, this will save an enormous amount of time, pressure, and anxiety on
everybody’s part when you do find that “home of your dreams”, and not loose your hope.
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