Despite being commonly confused, pre-qualification letters and pre-approval letters are two distinct documents. Today I’d like to talk about the difference between them and, also, which is better for buyers to have.
First, what is a pre-qualification letter?
A pre-qualification letter is a document containing information from a mortgage loan application. However, little of the information listed on this document has been verified. This means pre-qualification letters are not reliable evidence in the eyes of a seller, since only the buyer’s credit score has been confirmed.
Pre-approval letters, on the other hand, contain verified information about the buyer. All documentation has been collected, and the underwriter has reviewed and approved the loan file. For this reason, buyers with a pre-approval letter should be viewed as cash buyers when it comes to multiple offer situations.
As long as the property appraises and nothing pertaining to the buyers’ financial situation changes drastically during escrow, the approval process should go quickly for buyers with a pre-approval letter. Having a pre-approval letter is very important in the mortgage lending process.
If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.