Being Pre-Qualified - Pre-Approved or Under-Written Approved - Differences

The greatest leverage a buyer has is a “cash deal” and the buyer who does not get under-written approved loses this leverage.

Currently Las Vegas real estate sellers do not accept a purchase offer unless it is accompanied by a pre-approval letter from a lender. Getting pre-approved or pre-qualified is easy. The lender asks the buyer about his /her financials and calculates a number based on these numbers and credit scores, like FICO scores. The buyer doesn't have to prove anything at this stage. At least the buyer can get an idea on how much he/she can get a mortgage loan for and the approximate interest rate.

Talk to at least three different lenders

Anyone who wants to buy a home today should contact his/her lender first. Finding out how much loan you can reasonably expect to qualify for is a good step toward the goal of homeownership and a letter of pre-approval can be the mechanism that makes it happen. There is a distinct difference between a letter of pre-qualification and a letter of pre-approval and it is important that you be aware of this distinction. 

A fact that is often ignored by real estate buyers is that interest rate and terms of the mortgage are just as important as the property's price. A bad loan can wipe out any savings gained in negotiation. Buyers may not have enough time to comparison shop for the best mortgage after an offer is accepted.

 Pre-Qualified or Pre-approved

Pre-Qualification means there have been loan calculations made that show how much you "may" be able to borrow. While pre-qualification or pre-approval can shorten processing time for home loans, indicating how much house you can afford, and providing some leverage in bargaining power, it doesn't necessarily guarantee that such a loan will, in fact, be made by the lender.   TOP

Underwritten Approved

Under-written Approval means you actually have a loan waiting, subject only to finding the home and appraisal at the sales price. The "underwritten-approval" letter represents an actual commitment on the part of the lender. In order to secure such a letter it is necessary to complete a formal loan application and have your credit, salary, and bank funds checked. If the loan is a good investment, the lender will issue an underwritten-approval letter that provides a commitment for a limited period of time, subject to a satisfactory property appraisal and title search.  TOP