Sacramento Area Buyers: Are you pre-approved or merely pre-qualified?

Real Estate Agent with RE/MAX Gold, Fair Oaks

Sacramento Area Buyers: Are you pre-approved or merely pre-qualified?

There is a difference, and your offer to purchase the home you want might depend on what the letter from your lender says.

Before I take my buyer clients out to look at homes, I ask them to visit a lender (preferably someone in our area so they will be familiar with all of the grants, special loan packages and programs that are available in the Sacramento area).

If they don't know a good lender, I will recommend a few that they can choose from. I do know some great lenders who work quickly and efficiently and do a good job for my clients. I ask them to get pre-approved for a specific amount so we know that price range for our home search.

They should make an appointment and bring with them all of their financial documents, such as tax returns, pay stubs, bank statements, and information about their debts and bills. Ask the lender when you make the apointment what he or she wants you to bring, and bring it all.

The lender will then review all of the documentation, have you  complete a pre-application form and pull a credit report. The information you provide to him will be verified. After considering all of the circumstances, he will provide you with a letter that indicates that you are pre-approved for a loan for $xxx,xxx for the purchase of a home priced up to $xxx,xxx at X%, if nothing changes before close of escrow. This is a pre-approval letter.

Now if you want a pre-qualified letter, you can simply call a lender and give him a few facts on the phone, which he may or may not verify, and he can email or fax the letter to you.

You might be a fast food employee and tell the lender you are in the restaurant business and make $90,000 a year, and the letter you get might be based on those false facts. Some lenders won't provide you with a pre-qualified letter because they feel that there is a good chance you might not be able to close a transaction based on such a letter.

Now imagine for a moment that you are the seller reviewing two offers on your home.  One offer is backed up by a letter that says this buyer is pre-approved for a loan to cover the purchase of your home at the offered price. The other offer is for the same amount, but is backed by a pre-qualified letter.  Which offer would you prefer? Which transaction is more likely to close?

Especially these days when the inventory of homes for sale is low in the Sacramento area, there is competition for those homes. Make sure you present the strongest offer package you can.

And purely to preserve your own sanity, a pre-approval letter will give you confidence that you can search for homes in a certain price range. Nothing is more heart-breaking than to see a buyer fall in love with a house, and then find out that he can't afford as much as he thought.

Don't place yourself in that place.

Take a little extra time to get pre-approved before going shopping for what is probably the largest purchase of your life.

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Thinking of selling your home?  Remember, it costs you nothing for me to come out and discuss your home, the market in your area, and give you a market analysis and presentation so that you will know what you can expect to get for your home.

Call for appointment:  (916) 705-8951

Also Remember, if you are planning to buy a home, I can help you to tour any home for sale in Sacramento County and the surrounding areas, no matter what firm has it listed, and I can help you with your purchase if you find the perfect home for you.

Just give me a call at (916) 705-8951

Susan Neal
Broker / Realtor

Susan Neal Fine Properties
Fair Oaks, California

Full time real estate services in Fair Oaks CA, with friendly professionalism, 30+ years experience. 
I work hard to give my buyer or seller a low-stress transaction.

"Happy clients make me happy."

For all your real estate needs or questions, call me at (916)705-8951 or visitmy website at    

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Comments (4)

Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

A pre-approval is so important.  I have seen people think they are ready to shop when they are not.

Dec 28, 2013 01:32 AM
Wayne Johnson
Coldwell Banker D'Ann Harper REALTORS® - San Antonio, TX
San Antonio REALTOR, San Antonio Homes For Sale

Susan-This one step can save so much time and potential embarrassment. Hard to see why some are reluctant to do it.

Dec 28, 2013 04:05 AM
Larry Lawfer
YourStories Realty Group - Newton, MA
"I listen for a living." It's all about you.

I have been confused by these two approaches since in my area they use them interchangibly.  It is always best to have the bank actually check your credit and be approved and qualified. Our job is important to check this.

Dec 29, 2013 09:56 AM
Susan Neal
RE/MAX Gold, Fair Oaks - Fair Oaks, CA
Fair Oaks CA & Sacramento Area Real Estate Broker

Larry - I know that some agents may simply say "pre-qualified" when they mean "pre-approved" but it is important that we, as realtors, inform our clients and make sure they understand the difference. As a seller, I know I'd much rather have a buyer that I know can close escrow.

Dec 29, 2013 10:57 AM