Standing Apart From the Crowd
“Pre-Approved” implies to realtors and sellers you have a commitment from the mortgage company to lend you the mortgage subject to a sales price, loan amount, maximum monthly payment, ratified purchase agreement, an acceptable property appraisal, and maybe a few other random conditions. The “Pre-Approval” letter should be specific about the conditions needed in order to complete the mortgage loan and will also indicate a expiration date of the pre-approval based on the age supporting documentation provided. And of course, as long as you keep the information up to date, and there are no changes in your financial circumstances, the Pre-Approval should be able to be continually extended.
In some housing markets, Pre-Approval could present a competitive or negotiating advantage. A real estate environment in which realtors could be receiving competing contracts to purchase the same property, a purchase agreement with the mortgage contingency already resolved is the next best thing to having cash on hand to close. For that reason, it is possible some sellers may view a Pre-Approval more favorably than a Pre-Qualification letter.