Pre-Qualification vs Pre-Approval

When you are selling your home For Sale by Owner or even with an agent, you need to understand what kind of approval or well, not approval is provided with the offer. Many people get pre-qualified and pre-approval mixed up and they are entirely different as to how secure they are with their financing. The mortgage industry continues to provide relaxed letters of qualification or approval for clients who may or may not be able to close on the house they choose.

We will look at qualifications and approvals a bit deeper.


Getting pre-qualified involves supplying a bank or lender with their overall financial picture, including debt, income, and assets. The lender reviews everything and gives an estimate of how much the borrower can expect to receive. Pre-qualification can be done over the phone or online, and there is usually no cost involved.

Pre-qualification is quick, usually taking just one to three days to get a pre-qualification letter. Keep in mind that loan pre-qualification does not include an analysis of credit reports or an in-depth look at the borrower’s ability to purchase a home.

The pre-qualification has NOTHING reviewed in terms of documents – bank statements, W-2, 1099, tax returns, investment accounts or the credit. The potential borrower is verbally providing an idea of who they are credit wise and financially.

A pre-qualified buyer does not carry the same weight as a pre-approved buyer, who has been more thoroughly investigated. As a Realtor, I tend to stay away from pre-qualified letters for offers and request that the borrower go back and get pre-approved.


Getting pre-approved may take a few extra steps, but it is a better way to go to ensure a borrower can close a deal (or at least fairly good chance to close).

The borrower must complete an official mortgage application to get pre-approved, as well as supply the lender with all the necessary documentation to perform an extensive credit and financial background check. The lender will then offer pre-approval up to a specified amount.

Lenders will provide a conditional commitment in writing for an exact loan amount, allowing borrowers to look for homes at or below that price level.

This puts borrowers at an advantage when dealing with a seller because they are one step closer to getting an actual mortgage.


When a borrower provides the PRE-APPROVED letter from the lender, it gives the seller a warmer feeling that the deal will happen. As a Realtor I prefer a pre-approval with an offer over the pre-qualified letter.


Remember there are still conditions to be met on the mortgage side, even with a pre-approved letter. You should always call the lender and have a brief and to the point discussion about the pre-approval letter. Find out if there is anything major lacking from the file that could cause the loan to pause or be denied at later date – make sure they have reviewed credit, all documents and ask if they owe the lender anything.




This information comes from a Realtor and not a lender. This is just for informational purposes giving you a better understanding. We are not lenders or a mortgage company.

If you have a question about buying or selling your home, please reach out to Joseph Walter Realty at 248-294-7849 or via email at 

Thank you,

Scott Fader and Gary Brincat
Joseph Walter Realty

Joseph Walter Realty is a veteran owned company located in Michigan. Scott Fader and Gary Brincat are two of Michigan’s multi-million-dollar top producers. They have been working in real estate as brokers, Realtors, investors, property managers and real estate company owners for over 20 years. Together they would like to share their experiences, knowledge, success and failures to help buyers, sellers, Realtors, brokers and anyone else in the real estate and business, so that together we can grow as a community.