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What’s the difference between a prequalification letter and a preapproval letter?
by goldcoast on 




According to the Consumer Financial Protection Bureau the answer is prequalification and preapproval both refer to a letter from a lender that specifies how much the lender is willing to lend to you, up to a certain amount and based on certain assumptions. These letters provide useful information, but are not guaranteed loan offers.

There’s not a lot of difference between a prequalification letter and a preapproval letter. While there are some legal distinctions, in practice both terms refer to a letter from a lender that says the lender is generally willing to lend to you, up to a certain amount and based on certain assumptions. This letter helps you to make an offer on a home, because it gives the seller confidence that you will be able to get financing to buy the home. It is not a guaranteed loan offer.

Don’t worry about which word lenders use. Some lenders may use the word “prequalification,” while other lenders may call the letter a “preapproval.” In reality, lenders’ processes vary widely, and the words they use don’t tell you much about a particular lender’s process. The important thing is that the letter you receive provides enough information for sellers in your area to take it seriously. The best way to make sure that the letter you have will serve its purpose is to ask a local real estate agent.

Lenders usually check your credit when issuing a prequalification or preapproval letter.Many people wait to get a preapproval letter until they are ready to begin shopping seriously for a home. However, getting preapproved earlier in the process can be a good way to spot potential issues with your credit in time to correct them.

Since 1999 GoldCoast Mortgage Service, Inc. has arranged over 6,000 error-free, on-time, delivered mortgages at exceptional terms from our Cummings Center, Beverly, MA location. We have had the same phone number for 19 years and are in the top 70 of earliest licensed mortgage companies in the nation. In an age of technology-based applications you will find our guidance, knowledge, and process very enlightening, comforting and efficient. GoldCoast Mortgage Service, Inc. agents are licensed and arrange residential and commercial mortgages in MA, NH and ME.

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