Bob Northern & Company
12540 Patterson Ave
Richmond, VA 23238
Tel: 804-708-9463 • Fax: 804-708-9467
Financial Information
What is the difference between Pre-Qualified and Pre-Approved?

The difference is critical in whether you get or don’t get the home
of your dreams.

Pre-Qualified vs. Pre-Approved

Being pre-qualified means you simply called the bank and told the loan officer what you make, and how much your monthly installment payments are. The lender will run the front and rear end ratios on you and give you a general idea of what price house you can afford. He doesn't confirm your income or even run a credit report on you to confirm what you told him. How good is that?

Being pre-approved means that you have been to the lender and they have agreed to give you a loan. You have furnished the lender with verification of your income, assets, cash on hand and job stability. In addition, you have allowed the lender to run a credit report on you to confirm you are a good credit risk.
Once all of this has been completed by your loan officer, he will give you a letter stating you have been approved for a loan subject to you finding a home and having the house appraise for a predetermined loan to value (LTV) ratio. (e.g. an 80%, 90% or 95% loan).

This letter can (and should) be given to the "Seller" of your new home as written documentation to confirm that you are qualified. The only intangible they are faced with after accepting the letter is if the house they have sold you appraises for the sales price. You and the Seller both should be confident that the contract price is fair based on both of you having researched comparable sales in the immediate neighborhood.
Get PRE-APPROVED from a lender you can trust! Being pre-approved puts you in a much stronger bargaining position when you finally decide which home you want to buy.

Many times "Sellers" receive multiple offers on their home the first day they put it on the market! This situation happens every day in the real estate business! One reason is that there are so many buyers looking in any given price range. Buyers will jump all over a really nice home that comes on the market that doesn't require a lot of work after they move in! Really nice, clean homes located in popular neighborhoods sell unbelievably fast!

I want you to mentally change places with the "Seller" for a minute. Let's pretend your listing agent brings you three contracts on your home at one time! How will you choose the best one? How will you know the person can get a loan and will not renege due to a hidden unknown problem that does not surface until just before closing, just after you moved out?

Would you choose the buyer who says he gets loans all the time and isn't worried about getting a loan on this home. Buyer number two says he's called the bank and been pre-qualified for a loan to buy your home. Buyer number three presents you with a pre-approval letter and ask what date is most convenient for you to move. In addition he gives you a letter from the bank advising you that he doesn't need to sell his present home (even though it's under contract to be sold) in order to close on your house. He also wants to assure you that you don't have to make a double move because your new home that is under construction. Which one would you pick?

I highly recommend the following lenders. They are among the best in town. You can be assured you can depend on their word. They will tell you exactly the way it is. Their rates are always competitive. Their customer service, ability to get things done and experience is outstanding. When I use these lenders I know I don't have to worry about surprises. They do things right and on time!

You can be pre-approved in less than one day if you know what you're doing!