The short answer: Pre-qualified is a quick estimate. Pre-approved means a lender has checked your income, credit and savings and put a number in writing. If you are serious about buying, you want the second one. And in Rochester, there are stronger versions of pre-approval that can make your offer look better to a seller.
Pre-qualified: a quick estimate
You tell a lender, or an online form, roughly what you earn, what you owe and what you have saved. They give you a ballpark number back.
It takes minutes. Nothing gets verified, so it is a starting point, not a promise.
Pre-approved: a lender has checked
This is a short conversation with a lender where they look at your income, your credit and your savings, and tell you what you can borrow.
You send documents like pay stubs, tax forms and bank statements. They check them. Then you get a letter with your number on it. That is the letter a seller wants to see with your offer.
What a basic pre-approval is not
It is not a final loan approval. That comes later, once you are under contract and the lender has reviewed the house and the appraisal. A pre-approval says you are a strong candidate. It does not say yes to a specific house.
The number on the letter is also the most a lender will lend. It is not what you should spend. Your comfortable number is often lower, and we figure that out together.
Some pre-approvals go further
Here in Rochester, there are several programs built to make a buyer's offer stronger. They fall into two groups.
Fully underwritten. The lender does the full review of you before you make an offer, the same work they would do on a final application. A seller sees a buyer who is already checked. It still does not guarantee the loan will close.
Cash guarantee. You are fully underwritten, and the lender backs the deal. If the contract falls apart because the buyer does not perform, the lender could potentially buy the home. That takes a lot of risk off the seller's side, so the offer can look a lot closer to a cash offer.
These programs differ by lender and have their own requirements. Not every buyer needs one, and not every buyer qualifies. When we talk, I will tell you plainly which one makes sense for you and for the house.
What this looks like in Rochester
When you make an offer on a Rochester house, the seller's side will ask to see your pre-approval letter. An offer without one is harder for a seller to take seriously.
It also keeps you from falling for a house outside your range. You know your number before the first showing.
If the house is one other buyers want, ask which type of pre-approval your lender offers. It can change how your offer reads.
What this means for you
If you are thinking about buying, get pre-approved before you start looking at houses. Start with a plan, then start the showings.
Talk to a couple of lenders if you can. Shopping around is normal, and I am happy to point you to people I trust.
If you want to talk through where you stand, call or text me at 585-683-2775. No pressure. Ever.
James Reyes
Keller Williams Greater Rochester