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Pre-Qualified vs Pre-Approved

Pre-Qualified vs Pre-Approved

The terms pre-qualified and pre-approved sound very similar but are definitely different.  I can give very long descriptions for both, but I will make this short and simple.  


When a lender tells you the client is pre-qualified, this is good but doesn't necessarily mean much was done to screen the file.  A pre-qualification can be the lender asking general questions and typing a PQ letter based on what they are told.  This is a cause of many contracts terminating, due to very poor screening before the buyer starts making offers.  A PQ letter is only as good as what the buyer has disclosed to the lender, which often differs from the actual data that can be used in qualifying.


This the what you hope to see.  This means the lender has pulled credit, analyzed debt to income, verified assets, and actually conducted some form of legitimate screening of the file.  If this was done on more files, less homes would fall out of escrow due to failed lending.  Before you take a client shopping or accept an offer, you should verify the lender has ran them through AUS (automated underwriting system).  This does not guarantee a loan, but will give a good indication on its potential for success.   

If you have questions, always feel free to reach out for guidance.  You can call or text 720-354-0232.