Pre-qualification and Pre-approval: same difference, right? They sound the same … is it all just semantics? No. Hard no. “Pre-qualification” and “pre-approval” may sound interchangeable, but the weight they carry is like the difference between an ant and an elephant. Let’s break down the difference so you don’t get blindsided by the complications of either one.
Pre-Qualification
Pre-qualification is quick and easy - and everybody knows it, which is a problem. A pre-qualification letter, even from a reputable lender, carries almost no weight in the housing industry. If 2 people are bidding on a house, and one of them is pre-qualified and the other pre- approved, bet on the pre-approved bidder to win the deal — even with a lower bid. Why is this? Because getting prequalified requires no verification. The borrower essentially self- reports all the data needed to qualify them for a loan. A borrower could tell the lender that they have $1 million in the bank, a salary of $300,000, and a credit score of 850. The lender will then write a pre-qualification letter stating what mortgage they would most likely get approved for, based on criteria given.
RITA REALTOR | BROKERAGE 904-555-5555 | Rita@realtor.com | www.Authorify.com
LARRY LOAN OFFICER | OFFICE 904-555-1010 | Larry@loans.com | www.Authorify.com
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