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Did you know that these are different?
We see the words “pre-qualification” and “pre-approval” when it comes to credit cards and car shopping, but, did you know that these two words are also used in real-estate? Pre-qualification and pre-approval are two terms that could have a very different meaning when it comes to choosing one buyer over another.
A pre-qualification letter is generally credit check based without the request of other documents.
You may see these often when it comes to online offers or online loans. While this check verifies a buyer’s credit, this is not a deep check that goes into other finances and income. A pre-qualification letter does not give a clear picture of whether a buyer is in a good place to move forward on purchasing your home. Furthermore, a pre-qualification letter does not mean a buyer will necessarily be approved for a loan.
On the flip side, a pre-approval letter is a much stronger indication of a buyer’s ability to secure a loan.
A pre-approval letter typically requires more information and documentation than a pre-qualification letter, which in turn gives you more confidence in the buyer’s ability to secure a loan and complete a sale! Your chances of completing a successful sale increase when a buyer started the process with a pre-approval letter.
As a buyer, it is worth taking the extra step to verify your income, assets, and situation. This extra step shows your preparedness, but also gives you a sense of financial awareness as a buyer. As I say in this video, sellers are looking at the strength of the buyer right along with the strength of the actual terms in the offer.
This is important to you because you’ll need to understand what steps the buyer has taken in order to demonstrate an ability to pay and to ensure that your home is a good financial fit for them.
This is important if you are a buyer or a seller.
Pre-qualification and pre-approval are two terms to know and understand when it comes to being on either side of the fence; buying or selling. As a buyer, knowing which steps to take to make yourself stand out and to show your interest in a home is a viable step closer to getting the keys to your new home! From a seller’s stand point, differentiating between a pre-qualification letter and a pre-approval letter allows you to make an informed decision when reviewing an offer to purchase your home.
This is important to you not only because it establishes your credibility as a buyer, but it also determines what options will work best for you, what price points fall within your comfort zone with each loan type, and outlines any limits, restrictions, or other things that need to be considered during the home shopping and contract process.
Do you have questions about pre-qualification is versus pre-approval? Reach out to me! I would love to give you more information to be better prepared in your sale!
Click here to schedule a 15 minute (or longer if needed) initial phone consultation —>VIEW CHRISTINA’S CALENDAR!
