Financing Process


The Difference between Pre-Qualification Letter and Pre-Approval Letter



An initial evaluation of the credit worthiness of a potential borrower that is used to determine the estimated amount that the person can afford to borrow. Pre-qualification is a relatively simple and quick process of examining the potential borrower’s income and expenses in order to generate an estimated borrowing range that they would likely be able to repay to the lender.

It is important to note that the pre-qualification amount is not a guaranteed amount that would be receive from a financial institution if you applied for a loan but is simply an estimate, which can be used to gain an idea on what a person can afford to purchase. The pre-qualification process doesn’t include a more thorough look into the credit worthiness of the borrower, such as accessing your credit report or score.


Pre-approval is a more in-depth assessment of the amount that a person can afford to borrow and is done by a financial institution that will state the maximum amount that it would lend to the borrower. It’s far better to be preapproved for a loan than to be prequalified.

Advantages of receiving a pre-approval from lender

Timing is everything. Having the ability to make an offer when you find the perfect home is essential to owning your ideal home.

Be prepared! Showing a pre-approval letter from your lending institution creates confidence in sellers and eliminates questions and concerns that often arise especially when sellers have multiple parties interested. Be first in line and ready to go!

Know your options. If you’ve taken time to speak with a preferred lender then chances are, you have explored your interest rate options and monthly mortgage payment scenarios. Obtaining a pre-approval letter enables you as the Buyer to feel confident moving forward with your purchase offer.

Save Time by Looking at the Right Homes

If you are receiving automatic e-mail listings of available homes from your realtor, you can ask her to change the parameters to more tightly encompass the selection of homes that you are qualified to buy. If you’re not receiving e-mails from your agent, ask her to send them to you. Most MLS systems allow an agent to send clients much of the same data that agents receive. This way, you’ll save time by checking out homes within your budget.

  • Spend More Time Examining the Right Homes By decreasing the inventory of homes to those that fit your parameters, you can allot more time to thinking about all the little nuances each home has to offer. Many buyers never move past the price point when sorting out their preferences, but now you can devote your energies to looking at the little things that matter to you most such as whether your dog can jump the 6 ft privacy fence or you can oversee homework while cooking.
  • Gain Confidence & Avoid Disappointment When you eventually find the perfect home, nobody can take it away from you by telling you that you do not qualify to buy it. You can minimize anxiety and remove last-minute loan surprises that could disqualify you. You’ll have peace of mind knowing that the home you selected is yours. Moreover, you can tell your relatives and friends that the home you made an offer is definitely going to close and you will not “lose face” with anybody.
  • Leverage = Increased Bargaining & Negotiating Power Sellers will be more likely to immediately accept your offer, even if that offer is for less than list price, because you are giving the seller peace of mind that her home is sold. She can take her home off the market and place it into pending status with confidence.
  • Enjoy a Faster Closing Period Because there is no window period while your loan application is processed, the lender can speed up the entire processing procedure. Appraisals  can be ordered immediately. It’s possible to shorten a 30-day closing to two or three weeks, which comes in handy if a seller needs to quickly move and can’t decide which offer to accept. Yours will move to the front if you can accomplish the seller’s need to quickly close.

A mortgage approval is generally the longest contingency to satisfy in a purchase contract, and it is to your advantage to obtain a preapproval letter as soon as you’re ready to begin visiting homes with your realtor. Lenders will render a decision based on your complete loan application, employment verification and data from all three credit reports.

Recommended Lenders

  • Randy McMullin / AmStar Mortgage
  • Office: (770) 509-7827
  • Cell: (404) 606-1124
  • Fax: (770) 424-7827
  • NMLS#178020 GRML#25934
  • Email: randy@amstarloans.com