When you’re loan pre-approved, you have much more negotiating clout with the seller. The seller knows you can close the transaction because a lender has reviewed your income, assets, credit, and tax returns to be able to provide laptop underwriting approval. That’s HUGE! When a seller with multiple offers has to evaluate which offer to accept, being Pre-Approved for a loan can make all the difference between you or someone else buying the home. And you can save thousands of dollars by being in a STRONG negotiating position.

Pre-approval and pre-qualification are two different things. During the pre-qualification process, some loan officers will ask you a few questions and then hand you a “pre-qual” (PQF form). This Pre-Qual is so weak, that sellers often disregard them and reject the purchase offer. But the mortgage companies I use provide a complete pre-qualification form for my buyers, validating the loan amount the buyer can afford based upon your credit report and cash reserves for downpayment and reserves. 

The pre-approval process is much more thorough. During the pre-approval process, the mortgage company does virtually all the work associated with obtaining full loan approval. Since there is no property yet identified to purchase, an appraisal and title search won’t be conducted until a purchase contract is written and accepted, and escrow is opened.

Professional REALTORS® will not show homes until the buyer is pre-qualified by a lender. Sellers request only qualified buyers view their homes for security reasons and practicality and agents understand this. They don’t want to waste the time of the buyer, the seller, or their own time showing buyers homes they do not know the buyer can afford.