Buyer FAQ #1: Pre-Qualification vs. Pre-Approval

Real Estate Agent with Cedar Rapids/Iowa City, IA Lepic-Kroeger REALTORS S44645

Buyer FAQ #1: Pre-Qualification vs. Pre-Approval 


In the market today, many things have changed when purchasing a home.  Especially since 2008.  There are much tighter requirements for lenders, appraisers, and underwriters when determining who is eligible for the best rates and loan products.  


This will be step one in a Buyer Series in Purchasing a Home in Today's Market in Cedar Rapids, Iowa.  You need to begin somewhere.  With the development of TRID, which went into effect on Saturday October 3rd, it is more important than ever to research your lender and their company and ask lots of questions.

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As agents, we need to be a knowledgeable point of contact that keeps everything running smoothly from the accepted contract to the closing table.  But first, buyers need to be pre-approved.  Not just pre-qualified.  There is a difference.  And that is our first topic for buyers in today's market.


There are many different types of lenders, both online and in local credit unions and banks, plus mortgage brokers that reach out to lenders that are out of the area to secure financing.  Finding a lender that you can meet in person to have all of your questions answered is the key to a smooth and successful closing.


A pre-qualification letter is typically what you would receive when applying for a mortgage loan through an online portal.  It is typically subject to the bank/credit union receiving the documentation to support your income that you stated on the application.  This type of letter is only based on an initial credit score and needs further review and verification.


A pre-approval letter, on the other hand, is the letter that you receive from the lender once all of the documentation requested is verified.  As a rule of thumb, you will need to provide the following to receive a full pre-approval letter:


2 years of W-2 statements/tax returns

Most recent paystubs

3 months or more of bank statements (this is if you do not bank currently where you are applying for a mortgage)


Note:  If you have been at your current position less than 2 years, you may need to provide more information.  If you just started a new job, you may need to provide an offer letter from your employer or have several paychecks to verify income.


To a listing agent, a pre-approval letter is the best option in the interests of the seller.  And if you were to make an offer on a property where there were multiple offers in place, a pre-approval letter may get the house if other buyers are less prepared with just a simple pre-qualification letter.


Also, if you have a pre-approval letter, you have done all of the documentation upfront.  That means that you do not need to scramble to get all of the required information to the lender after the offer is accepted by the seller.  The seller prefers this type of pre-approval as it is stronger and less likely to fall through after the acceptance of the offer.


Next we will talk about choosing a buyer's agent and the different types of representation that you will see in the marketplace in Cedar Rapids.


Thank you for reading and keep smiling!





Posted by


Karen Feltman, REALTOR®, ABR, AHS, CHMS,                                                                           CNE,CRS, e-Pro, green, GRI, SRES, TRC

Lepic-Kroeger REALTORS

2346 Mormon Trek Boulevard

Iowa City, Iowa 52246


Mobile  319-521-0701

Fax   1-888-370-3108

Licensed in the State of Iowa

© 2010-2017 by Karen Feltman, Cedar Rapids/Iowa City Relocation Specialist 


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Gary L. Waters, Broker Owner, Waters Realty of Brevard, LLC
Waters Realty of Brevard, LLC - Rockledge, FL
... a small office, delivering big service!

Many do not understand the difference between pre-approval and pre-qualification.  The difference is like night and day - at least for the current day!

Oct 07, 2015 02:12 AM #1
Karen Feltman
Cedar Rapids/Iowa City, IA Lepic-Kroeger REALTORS - Cedar Rapids, IA
Relocation Specialist

Gary L. Waters, Broker Owner, Waters Realty of Brevard, LLC I agree.  There was a perfect example of this today when an agent sent me a "pre-approval" and offer on one of my listings.  It was subject to verifying income, verifying deposits, and verifying employment along with all of the other customary requirements such as executed purchase contract, appraisal, title work, insurance, etc.  Not sure what they did to get that piece of paper, but it seems like there is a lot left to do to make that buyer pre-approved.  Thank you for reading.

Oct 08, 2015 01:44 AM #2
John Meussner
Mason-McDuffie Mortgage, Conventional Loans, Jumbo Loans, FHA, 203(k), USDA, VA, - Walnut Creek, CA
#MortgageMadeEasy Walnut Creek, CA 484-680-4852

Great info, Karen, a preapproval (and a good one) is vital to a transaction making it to closing without any problems

Oct 13, 2015 05:55 AM #3
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Karen Feltman

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