This week we talked to Jeff Gilmore at Fairway Mortgage about the differences between a Pre-Qualification and Pre-Approval letter. A lot of people confuse these or use them interchangeably…well there is actually a HUGE difference between the two letters. Here is what Jeff had to say.
“A Pre-Qualification letter in today’s HOT Charlotte real estate market is honestly often not worth the ink on the paper in my opinion. This is when someone applies for a mortgage loan and we are basically taking you at your word and trusting that all the information that you provide to us on the application is true and accurate. We will run your credit, but in most cases clients are providing little to no supporting income or asset documentation for the Pre-Qualification letter.
A Pre-Approval letter on the other hand is much more detailed and no doubt the way to go! On a Pre-Approval letter we run through an application, run their credit and clients actually provide ALL income and asset documentation to be reviewed by an underwriter. Also, please know that most all banks are going to require the very same documentation….things like Tax Returns, W2s, Paystubs, Asset Statements, etc. By providing all the documentation up front, we are able to have our underwriting team do a full review and verify the information provided on the loan application is actually true and accurate and that your loan will close smoothly with no surprises!
Think about it….if you are the seller of a home….and there are multiple offers presented to you….which would prefer? A Pre-Approval letter where all income and assets have been signed off on or a Pre-Qualification letter where nothings been provided other than an application and a credit check? I’ll take Pre-approval all day!”