Knowing the Difference between a Pre-qualification and a Pre-Approval

I would first like to start off by saying “thank you” to everyone who used my services in order to purchase or refinance their home in 2012.  I am honored that you put your trust in me and my company to help you achieve the American dream of home ownership or save money by obtaining a lower interest rate.  Priority Lending Corp experienced record growth in 2012.  We are passionate about providing the best service to our customers and it brings us deep satisfaction when we hear about the great experience people have with our company.

As we head into the busy South Florida real estate season, I think it is crucial that both buyers and sellers know the difference between a pre-qualification and a pre-approval.  Given the fact that we quickly transitioned into a seller’s market it is even more important now for a buyer to be considered a “strong buyer” when making an offer. Sellers are now somewhat picky when choosing which buyer’s offer to accept so it is absolutely necessary that a buyer becomes pre-approved before making an offer.  Many mortgage brokers and bankers erroneously use the words pre-qualification and pre-approval interchangeably which leads most people to believe that they mean the same thing.  However, a pre-qualification simply means that an application has been taken and credit has been reviewed. A pre-approval letter, on the other hand,  goes more in depth and is typically accompanied by a DU (Desktop Underwriter) approval.  This is an automated underwriting approval engine created by Fannie Mae to which most banks and lenders adhere.  When a broker or banker obtains this type of approval on a borrower, it means that the borrower has been approved for a loan as long as they meet the conditions stated on the DU approval.  So, as a seller does this mean you should discard any pre-qualification letter on a potential buyer and only demand a pre-approval letter? The answer is: not necessarily. But, keep in mind that a pre-qualification letter is really only as good as the person or the company producing it.  If you received a pre-qualification letter from a seasoned professional in the mortgage industry then 95% of the time this letter will suffice and can be considered the same as a pre-approval letter because most experts, like myself, are so familiar with the DU system that they know what will be approved and what will not after reviewing an application in depth and asking a borrower the right questions.  It is similar to someone going to see a doctor who broke their arm.  A good doctor can tell by examining your arm if it is broken or not but he will eventually take an x-ray to confirm his diagnosis.  A good mortgage professional will give you a pre-qualification letter without obtaining a DU but they will eventually obtain one to confirm their own findings.  Buyers, sellers and realtors can all benefit by knowing the difference between these two types of letters and as a result this can lead to a smoother closing process for all parties involved.

To learn more about our company and mortgage products, please feel free to call Dan Longman, President of Priority Lending Corp, at 954-438-3776 ext.11 or email me at Please visit