A real pre-qualification letter is one page. It names the property, the price, the term and the loan program. It says what the broker checked before writing it, then it says in writing that it isn’t a commitment to lend. That last part surprises buyers, and it’s the most useful sentence on the page.
What follows is an actual letter from our office, read line by line. The buyers’ names, the street and the price are invented, because the real ones belong to a real family. Every word of the letter’s own wording is John’s, unchanged.
The Opening Line, and What “Verified by Us” Covers
The letter opens by certifying that the information you gave us has been checked, and it names what was checked, which is income, credit, assets and employment. Then it gets to the result.
“we have been able to establish a preliminary approval for a mortgage to finance a Single Family residence as outlined below”
Read that against the next paragraph of the same letter and you’ll find it corrected in John’s own words, which we’ll get to below. The word “approval” does a lot of work in this industry and very little of it has been standardized. The Consumer Financial Protection Bureau says so plainly, that lenders use the terms prequalification and preapproval differently, with some issuing one on information a borrower reported and nobody checked. Ours is a pre-qualification, and the paragraph above lists what we looked at before writing it.
So ask whoever writes your letter this. Did you pull my credit, and did you read documents for my income and my assets, or did you take my word for it? The answer changes what the letter is worth to a seller, and a broker who did the work will be glad to be asked.
Four Boxes and Three Missing Numbers
Below the opening paragraph sits a small box. On a letter from our office it holds four things.
| Field | What it says on the sample letter |
|---|---|
| Address | 14 Maple Ridge Road, Beverly, MA 01915 (invented, see above) |
| Purchase Price | $749,000 |
| Term | 360 months, no points |
| Program | 30 Year Fixed Rate, zero points |
Now notice what a seller’s agent doesn’t get. There’s no loan amount. There’s no down payment figure. There’s no interest rate and no monthly payment. Three of the four fields describe the loan’s shape rather than its size, and the fourth is the price of the house everyone already knows.
That restraint is deliberate, and it protects you. A letter printing your down payment tells the other side of the negotiation exactly how much cash you’re holding. A seller can use that, and you can’t take it back. A letter printing a rate would be promising a number no broker controls, because the rate comes from whichever lender ends up with your file.
The address field is worth one more note. It carries the house you’re buying, which means the letter was written for one property. If you lose that house and bid on another, ask for a fresh letter with the new address on it rather than sending the old one along and hoping nobody reads the top of the box.
Paragraph Two Refuses to Promise You a Loan
The second paragraph describes the work behind the letter, then stops you short.
“We have taken your mortgage loan information, pulled your credit report with a merged-in-file FICO credit score from the three major credit bureau repositories, and reviewed your income and assets with sufficient documentation to qualify. Please be advised that this qualification letter is not a mortgage loan commitment. A mortgage loan commitment, if approved, will come from a Lender we work with, after submission of a signed Purchase & Sales Agreement, completion of the application process, all supporting documentation, all lender stipulations, satisfactory review of value / condition of the property stated in the appraisal report, and a clear marketable title.”
A merged-in-file score means all three bureaus, not the one free score on your phone. “Sufficient documentation to qualify” means paystubs and statements were read by a person. Then comes the refusal, in the middle of our own letter, saying the thing we wrote isn’t the thing that funds your loan.
Count the conditions in that last sentence. A signed purchase and sale agreement, a completed application, the supporting documents, the lender’s own stipulations, an appraisal the lender accepts on both value and condition, and clear title. Seven gates, in order, and the letter hands you the list before you’ve made an offer. Most buyers meet that list one surprise at a time, in week three, by email.
Ask your broker which of the seven usually causes trouble on a house like the one you’re bidding on. On a 1900s Beverly or Salem two-family, it’s usually the appraiser’s condition notes rather than anything about you.
What the Massachusetts Offer Form Requires
Nobody tells first-time buyers in this state the next part. The standard Massachusetts offer form never mentions a pre-qualification letter. We read all three pages of the Massachusetts Association of Realtors Contract to Purchase Real Estate, Form #501 looking for the words pre-qualification, prequalification, pre-approval and preapproval. The form uses none of them, anywhere.
What the form does bind you to is clause 8, the mortgage contingency, and it names two dates. Your obligations are conditioned on obtaining a written commitment for financing by a date you fill in. The form adds that you won’t be treated as having made reasonable efforts unless you submitted one application by a second date you fill in. The letter in your hand is neither of those dates. It’s the reason a seller believes you’ll hit them.
Clause 8 also carries a trap worth knowing before you sign anything. If the commitment doesn’t come through, you have to give written notice that reaches the seller by five o’clock on the calendar day after that date. The form adds that a notice nobody receives leaves the condition waived. Clause 3 ends with the sentence “Time is of the essence as to each provision.” Miss the notice by a day and the protection you negotiated is gone while your deposit is still on the table.
Read in that order, John’s letter turns out to be a map of the contract you haven’t signed yet. The seven conditions in paragraph two are the road to the written commitment clause 8 demands, which is why we send the list early instead of at the appraisal.
Two Letters at the Same Price Aren’t Worth the Same
Sellers in a busy North Shore week often see several offers at one number. The letters attached to them stop the offers looking alike. One was produced in four minutes from numbers a buyer typed into a web form. One came after somebody pulled credit from all three bureaus and read two months of bank statements. Both say a price. Only one of them has been tested.
Most buyers get this backwards. They treat the letter as a formality to clear before the fun of house hunting, when that depth is the only thing separating their offer from the identical offer beside it. An experienced listing agent knows the difference and will sometimes call the broker to find out which kind they’re holding. A letter with a named loan officer, a license number and a direct phone line invites that call. A letter from a call center doesn’t.
If you want the practical version, ask the agent representing the seller what they look for in a financing letter. Most will tell you, and most will mention if they can reach a human being at the number on it.
The Rate Paragraph, and Why It Promises Nothing
The third paragraph is the one a careful reader slows down on.
“The Qualifying Interest Rate is based on current market rates. Your interest rate and other loan terms will be established in accordance with the policy of the Lenders which GoldCoast Mortgage will arrange your loan with. This will occur once you have submitted an application for the property that you will be purchasing.”
Qualifying rate and your rate are two different things. The qualifying rate is the figure used to test if the payment works on paper. Your actual rate and terms arrive later, from whichever lender we arrange your loan with, after you’ve applied on a specific property. As a broker we shop your file across many lenders instead of selling you one company’s product, and no broker’s letter can tell you the rate before that shopping has happened.
If a letter you receive somewhere else prints a rate next to the price, that’s the sentence to ask about. Ask what happens to it when the file goes to a different lender, and listen to how long the answer takes.
The Block at the Bottom
Underneath the signature sits the part that makes the letter checkable by a stranger. On ours it reads as follows, reproduced exactly.
“Licensed by the Massachusetts Division of Banks, Lic. No. MB1841. Licensed by the New Hampshire Banking Department, NMLS 1841. Licensed by the Maine Dept of Professional & Financial Regulation CSO5794. We are a Licensed Mortgage Broker in MA. Our license number is MB1841. We arrange Mortgages, but do not fund them.”
Six lines, and every one of them can be looked up by anyone who cares to. That last sentence is the plainest statement of what a broker does that you’ll find on any mortgage document. GoldCoast Mortgage Service, Inc. is the licensed mortgage broker. John Donlon, who owns GoldCoast, is a licensed loan officer, MLO #4931, and the letter carries his number because a person signs it.
Take the license numbers on any letter you’re sent and look them up before you rely on it. A letter with no license number on it earns a phone call before it goes anywhere near an offer.
What to Do with the Letter
Our fourth paragraph says you’re welcome to share our contact information with the real estate professionals representing you, and that line does real work. Give your agent the letter and the phone number together, because the letter answers a seller’s first question and the phone number answers their second one.
Beyond that, three habits save buyers grief. Ask for a new letter when the property changes instead of reusing the old one. Tell us before you open a new credit card or change jobs, since both can undo the file the letter was written from. And put the two dates from clause 8 in your calendar the day you sign the offer, not the week they come due.
We’ll tell you where you stand at no cost and with no obligation, including when that means waiting six months to make your file stronger. That answer costs us a loan now and then, and we give it anyway. If you want the background first, we’ve written about what getting prequalified for a mortgage involves and about the mortgage application itself, which is the step clause 8 wants finished by a date.
Questions We Hear About Pre-Qualification Letters
How long is a pre-qualification letter good for?
Treat it as current for about 60 to 90 days, and count it stale the moment anything in your file changes. Credit reports age, paystubs age, and a letter written against a job you no longer hold is worse than no letter. Call us for a fresh one rather than editing the date on the old one, which agents do notice.
Does a pre-qualification letter mean I’m approved?
No, and our letter says so in its own second paragraph. A mortgage loan commitment comes from a lender after a signed purchase and sale agreement, a complete application, the documents, the lender’s stipulations, an acceptable appraisal and clear title. The letter tells a seller you’re a serious buyer who has been checked, which is a different and still valuable thing.
Will getting one hurt my credit score?
A mortgage credit pull is a hard inquiry, and the effect is usually small and short lived. Shopping several mortgage quotes inside a short window is treated as one event by the scoring models, which exists so that comparing offers isn’t punished. If a credit pull worries you, say so on the first call and we’ll walk through where you stand.
Can I use one letter for every house I bid on?
You can, and you shouldn’t. The address field names one property, so a letter sent with an offer on a different house reads as careless to the agent on the other side. Asking for a new one takes us minutes when your file is already current.
What’s the difference between this and the letter my bank offered me?
A bank can offer you the loans that bank sells. As a broker we arrange your loan with one of many lenders, which is why our letter says the terms will follow the policy of the lender we place you with rather than naming them in advance. A bank’s letter is a letter about one rulebook, and yours might fit a different one better.