Prequalification and Preapproval Are 2 Different Documents
To the average consumer, there’s little or no difference between “prequalification” and “preapproval” letters, but to lenders – and real estate agents – there’s a world of difference.
A prequalification letter is easier for a buyer to obtain. When a prospective buyer meets a lender to find out how much house he or she can afford, the buyer may provide certain information such as employment, income and assets without providing documented proof. The lender assumes the information provided is correct and complete, and will base their decision on the information provided. Pre-qualified borrowers are not underwritten by the lender’s underwriter.
The preapproval letter is a much more detailed process in which the lender verifies, with documented proof, the information provided by the buyer such as employment, income and assets. Tax returns will be pulled from the IRS, and the buyer’s assets will be verified. The lender’s underwriter will review all this information to determine the amount of loan the buyer qualifies for. The preapproved buyer will have their file completely processed and underwritten by the lender.
The next step in the process is for the lender to issue a “commitment letter.” This can only happen once the buyer has found a property, and the lender has seen the appraisal, the title, and the flood cert, among other documents. The underwriter must issue a clear-to-close approval where all conditions have been met. This letter proves the lender is sufficiently confident with all the documentation to approve the mortgage.
It makes sense as a buyer to obtain a preapproval letter to provide to the sellers when the sellers are reviewing multiple offers. The seller will give those offers with a preapproval letter more consideration when making a decision.
Contact MiLEND today and see what all their loyal, satisfied customers have been saying all along. When you combine their level of world class customer service with the benefit of saving money, it becomes clear that MiLEND is the premier lender to use for all your loan and mortgage needs!