Pre-approval is stronger than pre-qualification because it involves actual verification of financial documents. A pre-approval letter shows sellers the buyer is financially capable, making offers more competitive. The buyer's agent typically recommends obtaining pre-approval before house hunting.
A buyer provides tax returns, bank statements, and pay stubs to a lender who issues a pre-approval letter for up to $350,000. This letter accompanies the buyer's offer, giving the seller confidence the buyer can close.
Distinguish pre-approval from pre-qualification. Pre-QUALIFICATION is an estimate based on self-reported info. Pre-APPROVAL involves verified documentation and is much stronger. Agents should recommend pre-APPROVAL.
Related Terms
Related Concepts
The fiduciary obligations a buyer's agent owes to their client, including loyalty, obedience, disclosure, confidentiality, accounting, and reasonable care.
A form that explains to the buyer the types of agency relationships available and the duties associated with each, required to be provided before substantive discussions begin.
The practice of a listing broker sharing commission with a buyer's broker, historically offered through the MLS but now prohibited from MLS display under the 2024 NAR settlement.
An initial meeting between a buyer and agent to discuss the buyer's needs, explain agency relationships, review representation agreements, and establish expectations for the home-buying process.
The duty of a buyer's agent to act solely in the buyer's best interest, avoiding any conflicts of interest and putting the buyer's needs above the agent's own financial interests.
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