Pre-Qualification versus Pre-Approval

IMPORTANT INFORMATION ABOUT PRE-QUALIFICATION & PRE-APPROVAL

Please be aware that most Buyer’s Real Estate Agents (an agent representing you vs. the seller in a transaction) will want to know the maximum loan or payment for which you can qualify. However, they may NOT WISH TO HAVE THAT INFORMATION INCLUDED IN either the PRE-QUALIFICATION or PRE-APPROVAL LETTER since that may undermine your ability to negotiate with a seller if the seller knows you are approved for MORE than the price you offer for a property.

PRE-QUALIFICATION

A PRE-QUALIFICATION request is a request by a prospective loan applicant for a preliminary determination on whether the prospective applicant would probably qualify for credit under an institution's standards.

Mortgage Centre will view the applicant’s Credit Report and qualification ratios before issuing a PRE-QUALIFICATION LETTER. NOTE: Some lenders will give you a PRE-QUAL letter WITHOUT doing any or much investigation regarding the applicant’s TRUE ability to qualify for the loan being sought.

Many real estate agents and brokers require a PRE-QUALIFICATION Letter prior to showing houses to prospects and submitting a contract using the PRE-QUAL as a basis for demonstrating a prospects ability to get a specified loan.

PRE-APPROVAL

A PRE-APPROVAL request is a request by a prospective loan applicant in which the lender has calculated the applicant's buying power and has committed in writing to make the loan, provided the home's value draws an adequate appraisal. The lender verifies the applicant's income, asset and debt information.

The PRE-APPROVAL LETTER is based on a comprehensive analysis of the creditworthiness of the applicant and is considered by most agents to be a more valuable tool for confirming a potential buyer’s ability to qualify for a desired loan.

To get started with either process, click HERE.