I was reading an article today, the topic of which was mortgage pre-qualification v.s. pre-approval. The subject matter was relevant and it was well covered, but as thorough as the author’s research was, I’m not sure it matters. Having been in the Real Estate industry for so many years, I can tell you honestly that even experienced home buyers don’t know the difference, nor do they care. The confusion has always been there and I suspect the distinction will never really be clear-cut. As a matter of fact even acquaintances of mine whose profession is mortgage lending, almost never differentiate between the two. In my humble opinion there should be no such animal as a pre-qualification.
Here’s the thing. In Arizona as in many US states, a pre-approval letter is required to accompany an offer on a home. Notice I specified pre-APPROVAL. This assumes that a number of the buyer’s critical qualifications have been verified i.e. employment, income, down payment, credit details. Not always so.
OK so things come up, but some things shouldn’t be a surprise. I believe a Seller ought to be able to reasonably expect that a pre-approval letter brings with it a certain assurance. After all they are pulling their property off the market for this pre-approved buyer. A mortgage lender is obligated to know basic qualifications of a buyer before issuing that all-important pre-approval letter.
But that’s not really what I was getting at, my point is this. The better part of responsibility for all of this sits firmly on the shoulders of the buyer. Be prepared. Talk to a lender early in the home buying process. As a matter of fact, one of the biggest favors you can do for yourself is to see a lender FIRST. Have every single piece of requested paperwork ready for them. If even one thing is missing your pre-approval letter is meaningless. I don’t say this to discourage anyone or to dampen your excitement. I say this to save time and to save money, mine, yours, and the sellers. But most importantly I say this to save you an enormous amount of disappointment.
I was reading an article today, the topic of which was mortgage pre-qualification v.s. pre-approval. The subject matter was relevant and it was well covered, but as thorough as the author’s research was, I’m not sure it matters. Having been in the Real Estate industry for so many years, I can tell you honestly that even experienced home buyers don’t know the difference, nor do they care. The confusion has always been there and I suspect the distinction will never really be clear-cut. As a matter of fact even acquaintances of mine whose profession is mortgage lending, almost never differentiate between the two. In my humble opinion there should be no such animal as a pre-qualification.
