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What’s the difference between a pre-qualified letter, a pre-approval, and a loan commitment? I can sum them up for you fairly easily.
A pre-qualified letter is just that: a pre-qualification. You speak to a bank and give them some initial financial information. Based on that information, they write you a letter. While it’s typically not very meaty, it might be just what the listing Realtor or the seller is looking for.
A pre-approval means that you’ve spoken to a lender and given them more asset information. The pre-approval letter is far more substantive and is only contingent on finding you a house. It’s a nice, strong letter that’s supposed to get the seller’s attention.
"Pre-approval is a strong letter that's supposed to get the seller's attention."
A loan commitment means the house you want to buy is under contract. Through talking with your lender, you’ve given them all the information that they needed in order to give you a loan. Based on your financials, they are providing you a loan commitment letter stating that they’re ready to give you the money you need to settle on the house. This letter means that, regardless of any outstanding title or insurance factors, they are committed to giving you the loan.
After that, you’re ready to buy your house. Keep the questions coming! Also, feel free to give me a call if you need information regarding further details.
