Pre-Approved or Pre-Qualified?Posted by Brett Tousley on Saturday, October 3rd, 2009 at 1:18pm.
Is there really a difference?
Pre-Qualified, and Pre-Approved are two very different things, and yet the two terms seem virtually interchangeable when talking with Realtors, and Borrowers. Most Realtors know that they prefer to deal with someone who is Pre-Approved to someone who is Pre-Qualified, but when pressed, they are not sure of the difference. Although they may not know why, they are correct in wanting to deal with a Pre-Approved borrower more than one who is Pre-Qualified. The bottom line difference is that someone can be Pre-Qualified, and yet never be approved for a loan while someone who is Pre-Approved will rarely fail to close on a loan.
The answer can be found in the root of the two words: qualified, versus approved. The word approved implies something has been verified, or proven. If I have a conversation with a prospective homebuyer, where I explain the fundamental requirements of a specific loan, and that buyer tells me they meet all those requirements, they are Pre-Qualified. I have no reason to believe the information that buyer has given me is not true, but I have not received all the documentation needed to verify, or prove that it is. Once all the necessary documentation of the buyer’s information is verified, then I can say that buyer is fully Pre-Approved.
I counsel each of my clients that if they are completely honest, and truthful, there is actually no difference to them between Pre-Qualified, and Pre-Approved. However, to be taken seriously when presenting an offer to purchase a home, there is no substitute for fully Pre-Approved. Because of this perception issue, it is always best to get all the required documents turned into your lender as soon as possible so you can truly be Pre-Approved.
by Ron Brown @ First Mortgage Company of Washington. You can reach him at 253-881-4699
Brett Tousley is the designated broker and owner of NW Home Brokers. He can be reached at 253-820-2745 or firstname.lastname@example.org
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