What’s the difference between a Pre-Qualification Letter and a Pre-Approval Letter?

 

What’s the difference between a Pre-Qualification Letter and a Pre-Approval Letter?

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Some mortgage lenders provide pre-qualification letters, which basically state, “If what the applicant told me is correct, they qualify for a mortgage amount up to $xxx,xxx at x.xx%.” As such, some say pre-qualification letters aren’t worth the paper they’re printed on.

Pre-approval letters, on the other hand, involve the mortgage loan officer receiving the applicant’s (your) information (e.g. pay stubs, tax records, etc.), verifying its accuracy, and checking your credit. A pre-approval letter basically says, “I, the loan officer, have verified their application information and credit profile, and, unless there’s something I don’t yet know about or unless their financial profile changes, they will qualify for a mortgage amount up to $xxx,xxx at x.xx%.”

Make sure to ask for a pre-approval letter.

If the lender you’re working with doesn’t want to look over your financial documents and prefers to issue pre-qualification letters, we’d advise you to have a heart-to-heart with them and insist on a pre-approval letter or let us help you connect with a reputable loan officer who will really take care of you from start to finish.

We recommend applying with several lenders, even if you have a trusted, preferred lender. Our Service Providers reference includes reputable lenders.


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