Pre-Qualify VS PreApproval for Mortgages

Many people apply to a mortgage company for a pre-qualification letter, so that they can make an offer on a house. It's quick, painless and get's you off and running. However, you should know that there is a big, big difference between a pre-qualification letter and a preapproval letter. I prefer to refer to the latter as a letter of commitment. When you apply for a preapproval letter or a letter of commitment, you will have to go through the entire loan process. That meaning, you will have to provide the mortgage person everything about you. Your debts, your liens, your income, your w2's, your taxes and much more. Then and only then after they thoroughly examine you, will they give you approval for a loan and tell you how much you are qualified for. My opinion is that in general most buyers should go after a letter of commitment or a preapproval letter. never use a pre-qualification letter. To me it is worthless! Sure the letter of commitment or preapproval letter takes longer. But when you get done you know where you stand. On the other hand, the pre-qualification letter does not guarantee you a loan approval. You have not submitted, nor have you gone through the loan process. I hear about so many buyer's broken hearts. They got the pre-qualification letter, put in an offer on their dream home and lost it because the mortgage company would not approve them for a loan. I think that they should outlaw the "prequal" letter...it's worthless. Take the time to go through the complete loan process and get that preapproval letter or letter of commitment first! Then when you go put an offer in on a property you can rest assured that you have a loan commitment behind it..Wayne