Preapproval vs Prequalification

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FLORIDA REAL ESTATE SALES ASSOCIATE COURSE

Types of mortgages

Section 4 of 72

You must distinguish between these two status levels. Prequalification is an informal estimate of how much a buyer can borrow, based on unverified information provided by the buyer; it does not guarantee a loan. Preapproval is a much stronger status where the lender has actually verified the buyer’s income, credit, and assets. A preapproval letter constitutes a conditional commitment to lend, making the buyer’s offer much more attractive to sellers because it shows the financing is likely to close.