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Richard, Lawyer
Category: Real Estate Law
Satisfied Customers: 55132
Experience:  32 years of experience as lawyer in Texas. I'm also a Real Estate developer.
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We had a party write an offer without a pre qualification letter.

Customer Question

We had a party write an offer without a pre qualification letter. When we asked them to produce a pre qualified letter, they gave us a pre approval letter. It is my understanding that the pre approval is not good enough. I do not know why our agent let the..."
Submitted: 2 years ago.
Category: Real Estate Law
Expert:  Richard replied 2 years ago.
Hi! My name is ***** ***** I look forward to helping you!
Can you provide me a bit more information? Does this offer have a financing contingency in it? Thanks.
Customer: replied 2 years ago.
Yes it does- there was a box for prequalified and preapproval. Prequalified was checked. We didn't realize this doesn't mean much and our Relator let it through
Customer: replied 2 years ago.
Expert:  Richard replied 2 years ago.
Thanks for your quick reply. I'm sorry it took a bit....I had to type my response. :) Thanks for your patience.
You are actually better off with the pre-approval letter than a pre-qualification letter. So, even if the pre-qualification box was checked, it they gave you a pre-approval letter, they would have satisfied that requirement because a pre-approval letter is the second state of qualifying for financing while the pre-approval letter is the second. What you really need is a commitment letter, but they really can't get that until they have the specific house under contract. Pre-qualifying is very preliminary. You supply a bank or lender with your overall financial picture, including your debt, income and assets. After evaluating this information, a lender can give you an idea of the mortgage amount for which you qualify. Pre-qualification can be done over the phone or on the internet, and there is usually no cost involved. Loan pre-qualification does not include an analysis of your credit report or an in-depth look at your ability to purchase a home. Getting pre-approved is the next step, and it is much more extensive, requiring an official mortgage application and supplying the lender with the necessary documentation to perform an extensive check on your financial background and current credit rating. From this, the lender can tell you the specific mortgage amount for which you are approved. The preapproval means you have a conditional commitment in writing for an exact loan amount. Far better than a pre-qualification letter. :)
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