Comments on: Prequalifying vs. Preauthorizing vs. Preapproving Letters

By: DW

DW — Tue, 22 Dec 2009 22:43:18 +0000

Good article. I’ve been trying to figure out what each of these terms means, since I am in the process of buying my first home. I just felt like all of this terminology was like learning another language until I started researching online. Thank you.

By: Murphy07

Murphy07 — Tue, 02 Dec 2008 18:39:54 +0000

Well, I was just told by a realtor that had ONE and only one property that I wanted to see that I needed to complete an entire loan application before he would show me a property. By the way, HE just happens to be a loan officer!! A prequalifying letter from someone else wasn’t good enough.

So, I called another realtor to show me the property. They were happy to oblige, BUT they asked why I would want to see that property since it was already sold. They also said Realtor #1 MUST have known, since he was the listing agent.

By: Girls Just Wanna Have Funds

Girls Just Wanna Have Funds — Thu, 31 Jan 2008 15:36:16 +0000

You’re right, it is all semantics. But these days its all about getting the approval from the underwriter. When we closed there was another couple down the hall that had their loan YANKED at the closing table. The underwriter called at the last minute to say they would not be able to back the loan.

So its not over until the underwriter sings.

By: Miller

Miller — Thu, 31 Jan 2008 02:56:46 +0000

Darn, I wish I had read this earlier before talking to those lenders all day again!

I particularly agree with your “its all semantics” paragraph. Still now, holding two such letters in my hand, I don’t know exactly what I have! Both lenders asked for A LOT of information (including credit checks and statements), yet I don’t even have a property in mind yet. One lender made a pretty official looking complete cost break down with estimated closing costs, taxes, etc. The other just gave me a letter saying I am pre-qualified for x amount of money.

It’s confusing… I just hope I got what I needed in the end!

By: Tyler

Tyler — Wed, 30 Jan 2008 14:41:18 +0000

I think that this is a hot button issue now in certain markets where homeowners are looking to get out from under a proeprty in a hurry. It makes sense in that instance that a seller may accept a lower offer from someone who has the pre-approval letter in hand.
Of course, in “up” markets we get greedy and hold out for the highest offer

By: bearmtnridge

bearmtnridge — Wed, 30 Jan 2008 13:26:50 +0000

But couldn’t the Prequalifying letter be considered the same as “stated income” someone can say anything and waste a sellers time. I think people are still looking for the preapproval letter that someone is a serious canidate.

If I had two people one with prequalifying letter offering more and one with a preapproval letter offering what it’s listed as I think I go with the preapproval if time was an issue. It may take the first buyer longer to go thru the approval processs and then be declined.