Answers · Buying a home
Pre-qualification or pre-approval: what do sellers actually care about?
Sellers and their agents care about a pre-approval, and the strong ones care about how it was done. A pre-qualification is an estimate from what you told the lender. A pre-approval means your credit was pulled and, done right, your documents were reviewed. In a competitive offer, the letter backed by reviewed documents is the one that gets taken seriously.
Written by Andrew Malm, Senior Loan Originator, NMLS# 2663426. Last reviewed .
The words get used loosely, so here is how I use them. Pre-qualification: we talk, I ask about your income, debts and savings, and I give you a range. No credit pull, no documents. It is useful for planning and nearly useless in an offer.
Pre-approval: I pull credit, I review your pay stubs, bank statements and tax returns, and I run the file the way an underwriter will. The letter that comes out of that is a real statement about what you can do.
Here is the part most buyers never hear. Not every pre-approval involves document review. Some are a credit pull and a conversation. A listing agent who has been burned by one of those will call the lender on your letter and ask. I would rather be the lender who can answer.
The strongest position is a pre-approval where the only things left to verify are the property and the appraisal. That is what I aim for before anyone writes an offer.
What I'd do
- Get pre-approved before you tour homes, not after you find one.
- Ask your lender whether your documents were reviewed or just discussed.
- Tell your agent the lender will take the listing agent's call. It helps more than people think.
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