Get the letter right before you make the offer
Prequal, preapproval, verified approval: three kinds of yes
Desk answer
Prequalification is usually a quick estimate based on what you tell a lender. Preapproval usually means the lender has pulled credit and reviewed income and asset documents. Some lenders also offer a verified or underwritten approval, where an underwriter has reviewed the file. Lenders use these names differently, so ask what was actually checked.
Last reviewed against the primary sources listed below.
Side by side
| Prequalification | Preapproval | Verified approval | |
|---|---|---|---|
| Credit pulled | Often not, or a soft check | Usually a hard inquiry | Yes |
| Documents reviewed | Rarely | Pay, assets, debts | Full file to an underwriter |
| Time | Minutes to a day | A day to several days | Longer, depends on the lender |
| Weight with sellers | Light | Expected in many markets | Strongest |
Which is better
Preapproval is usually worth the extra step before you make offers, because it surfaces problems while there is still time to fix them. The CFPB notes that lenders use the two terms inconsistently, so judge a letter by what was verified, not by its title.
Do preapprovals go through underwriting?
Most preapprovals are reviewed by a loan officer or automated system rather than a human underwriter. Full underwriting happens after you have a signed contract and a property to appraise.
Questions buyers bring to the desk
What is the difference between mortgage pre-approval and pre-qualification?
Prequalification is usually an estimate based on information you provide. Preapproval usually involves a credit check and a review of your income, asset and debt documents.
Which process takes longer, prequalification or preapproval?
Preapproval, because the lender reviews documents and credit. Prequalification can take minutes.
Is it better to be prequalified or pre-approved?
Pre-approved, in most cases, because sellers and agents give it more weight and it surfaces problems earlier.
Do pre-approvals go through underwriting?
Usually not full underwriting. A loan officer or automated system reviews the file; a human underwriter reviews it after you are under contract.