A pre-approval letter is superior to a pre-qualification because all the verification for income, credit, employment along with length of your job, verification of down payment and a few other key elements of your loan are all done before you get your letter. Pre-approvals are more favorable to your buyer agent as well as the home sellers because you‘ve taken the time to get it in order to save the seller time in closing the transaction. Verses, a pre-qualification letter that you can get over the phone sometimes from a loan officer who pulls your credit report and then based solely on the your word about you employment, income and available down payment, can they give you a letter with an amount that you can use to present to a buyer agent to begin looking at homes that are at or lower than that price you qualify for. But all too often these pre-qualification letters fall apart as the “loan processors” proceed with their job to confirm what the buyer has claimed, and too many times it become clear the buyer misstated their income or other fact, the sale falls apart, and both the broker and agent have an unhappy seller.

It won’t be much longer before pre-qualification a letter is just not going to be acceptable at all when you start home shopping.

The legwork of a pre-approval letter will have to be done before one starts looking to purchase a home and will have to be updated every 30 days as the search proceeds to ensure things like job, income and credit have not changed during the search. This would be a good time to tell would-be home buyers that during your home search, the loan and closing process, “DO NOT” make any changes in your employment or make large purchases or leases or take out or co-sign any loans. The reason being lenders will very often do a last-minute re-check of your credit and employment a day or two before your closing. And if they see any changes that they deem significant to them, they will kill your loan!