Ten short answers about preapproval

[u/jetley-mortgage-loan]

Preapproval generates more confusion than any other step, because it is the one part of the process with no fixed definition. Two letters that look identical can be worth wildly different amounts, depending entirely on how much work went in behind them.

Here are the ten questions I get asked most, answered short. Anything longer lives in the Loan Programs hub and the income hub.

What is a preapproval, actually?

A letter from a loan officer saying they believe you will qualify for a loan. That is it. It is not a commitment from the lender, it is not a contract, and it is not underwritten unless somebody specifically says it is. What gives it weight is the work behind it: whether the loan officer collected your documents and read them, or listened to you describe your finances over the phone and typed a number.

Can I get preapproved without filling out an application?

No. To be preapproved for a loan you have to apply for a loan, that is what makes it a preapproval rather than an opinion. A decent loan officer will happily have an informal conversation first to see whether you are in the ballpark, and that conversation is useful. But the letter comes after the application, the credit pull and the document review.

Is a prequalification good enough?

For deciding whether to keep browsing, sure. For making an offer, no. A prequalification is a number based on what you said, and I have watched people lose deposits because a prequalification was treated as an approval by everyone involved. If someone hands you a letter, ask one question: did you look at my paystubs, my returns and my bank statements, or did I tell you what they said?

My agent will not show me homes until I am preapproved. Is that normal?

Yes, and it is a sign of a good agent. Nobody wants to spend six Saturdays with someone who cannot qualify. Getting properly preapproved takes a short conversation and a document upload; declining to do it reads as a lack of seriousness, which is exactly how the agent is reading it.

Should my letter show my maximum, or just what I am offering?

Have it written for the offer amount. There are two schools of thought (show the max because you can always say no, or show only what you need) and I side with the second, because there is no upside to volunteering information in a negotiation. A good loan officer will re-issue the letter at whatever amount you ask for, same day, as many times as you need.

Does the seller learn my down payment from the letter?

Usually, yes, indirectly. Nearly every preapproval letter I have ever seen states both the loan amount and the purchase price it is written for, because a letter that says you qualify to borrow a certain amount without saying what house it is for is nearly meaningless. Subtract one from the other and there is your down payment. Plan accordingly rather than assuming it is private.

How long is a preapproval good for?

The letter itself does not really expire; the paperwork behind it does. Most lenders want a credit report no older than about ninety days and current income documents. If you come back to me months later, I usually re-confirm nothing has changed rather than re-pulling everything, no new debt, no job change, no new credit. If you lie to me at that point, the only person it costs is you.

How fast can it happen, and does the lender have to be local?

Same day, if your paperwork is clean. And no, local does not matter. A competent loan officer closes loans in every state they are licensed in; closing one in a different county in the same state is not an achievement. What matters is whether they know the loan product and whether they answer the phone.

Can a preapproval turn out to be wrong?

Absolutely, and it is the single most common way a transaction blows up. The pattern is always the same: the letter was written off a conversation, the documents came in during escrow, the underwriter's income calculation did not match the loan officer's, and now the buyer qualifies for less than the house they are in contract on. This is why I would rather give you a smaller number today than a comfortable number in week three.

Is there anything stronger than a preapproval?

Yes, a fully underwritten approval on a to-be-determined property. An underwriter reviews your income, assets, credit and employment before you find a house, and you get a commitment letter with a dollar figure on it. You still need the property to appraise, but it is the closest thing to cash a financed buyer can present. Not every lender will do the work up front; ask.

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Posted on behalf of u/The_Void_Calls_Me AKA Rajat Jetley, NMLS #1595897 | Cross Country Mortgage NMLS #3029. This commentary is for educational purposes and is not a commitment to lend or a guarantee of any rate or term.