PA for the win.  A PQ is worthless, and in the hands of the wrong loan officer, a PA is as well.  Really, it comes down to did the loan officer review credit?  Review income?  Assets?  Do they know the file?

A PQ letter shouldn't even exist in today's world.  Full credit review along with income/asset documentation should be the norm.

I do know the difference.  I also know about not counting chickens until they hatch.  The only thing I want to hear is "clear to close".

There is a difference and a pre-approval from the right lender is money in the bank to me so long as the buyer doesn't do something stupid.

Pre-Approval is stronger but neither supersedes the written sales contract terms

Jody Bruns, CDLP, CMMU Thanks for intro to your post.

YES... I understand the difference and it is a huge difference! 

  You said it... has the lender actually pulled their credit, seen their tax returns, etc.

PreApprovals are the way to go, but even on Prequalifications, I still pull a credit report. Need to know the FICO before I do anything.

there is a difference....we are listing agents and want to see a pre approval letter....and it's as good as the person who wrote the letter.... we like our own people to pre approve....and then if they are qualified, they can select another institution.... 

Jody,

I agree with Sandy Padula and Norm Padula, JD, GRI NMLS#1483386   A

It depends on the lender.  

It depends on the borrower.

It depends on many factors.

I prefer pre-approval v. pre-qualed.  If I get a letter, the first thing I do is ask the lender if they've reviewed docs.  If not, I consider the form worthless.

I prefer  pre approval between the 2.  

Yes I know the difference and a preapproval letter always has more weight than a prequalification letter. Of course it also depends who is writing the letter and what the quality and reputation of the lender is.

A pre-approval is stronger, but that could also depend on the particular lender. I personally don't see the point of a pre-qual letter in today's market, nor whay a reasonable buyer would think this is a good thing and in their best interests

A Loan Approval Letter has been required ever since the downturn in 2006 as has proof of funds.  The agent bringing in the offer needs to give the seller and listing agent confidence the loan will be completed in a timely manner.  Once again, reputation raise it's head.

A preapproval is supposed to be more worthwhile. I'm sure a LO can tell you the exact percentage of that being untrue.

Pre-Approvals used to be stronger before TRID. Nowadays, the lenders may not even have checked income and assets before they are writing a pre-approval.  

Jody Bruns, CDLP, CMMU Preapproval is better.

Jody Bruns, CDLP, CMMU Yes, I do know the difference. I prefer to initially get a pre-approval letter and bank on the lender commitment letter.

Since i'm quiet not a new in real estate, I guess I have a solid idea about the difference. 

We have a very specific pre-qual form the lender must fill out before the buyers submit an offer.  That gives us  a clear picture of what has been done to get the buyers 'truly' qualified.  Letters aren't worth a dime in my state.

Pre-approval carries some weight, but a prequalificiation letter is based upon assumptions and no facts!

Preapproval always trumps

It depends on how much research and verification the loan officer actually did before issuing the letter. They both have contingencies.

There are some lenders you wonder if if it is worth the paper printed.

I had this argument with a lender/seller a few years ago and discussed this with an attorney involved with our state forms. Our forms require pre-approval, but the terms prequalification and preapproval are used interchangeably. And the lender/seller admitted to me there were no industry standards. Everything is subject to the whims of underwriting. You really don't have true approval until underwriting says okay and the property appraises.

Of course I know, I'm real estate agent -

You explained this one in your blog--nice

It is worth the effort every time to have a pre approval. A pre qual letter may not be worth the paper it is written on. 

John has a good answer.

Thanks for sharing your link.

The reliability of the mortgage loan officer is the most important factor.

I always require a PA.

Richard Weeks nailed this one!

Pre-Qual = they have a pulse and can fog a mirror.

Pre-Approval is the only way to go.

I do my follow ups because I do know the difference...

a prequal letter is in the same category as scott toilet paper... worthless

The pre approval letter is the one that I like to see. A pre qual letter means the lender has only talked with the buyers and given them a preliminary approval based upon nothing much. 

A pre-qual only means you "talked" to a lender and you could have told the lender just about anything to get him/her to say "you look good".  But a pre-approval means you went to the next step by either uploading your required documentation on line or you physically met with the lender and started the process.  The PA letter is worth more than the PQ any day.  But still no guarantee.  You have to make it to the Loan Commitment and Closing!

Jody Bruns, CDLP, CMMU - of course, the listing agents want PRE-APPROVAL letter, lot different than pre-qualification letters.

It all depends on the lender..there are some letters I get that I know the buyer is golden because I know the lender..never varies from the truth.

Thanks for clarifying this Jody, but as we all know neither will prevent some buyers from blowing it before closing.

Either shows me that the buyer is interested enough to see if they can affoard the property.  I follow all loans to make sure thay are progressing smoothly.

I have lost only 1 deal in the last 3 years

You wrote a great blog

A prequalification letter is worthless because it is usually based on unverified information the buyer provides.  And a pre-approval letter is worthless if it is from a lender with a reputation for not delivering the funds at settlement.

Pre-approval is the only option in our market - pre-quals are worthless!  If my lenders write that pre-approval, you can bet the deal will Close!

There is a difference.  The valus of anything written on paper is determined by a good vetting process.  

Good post, question and hostess thank you Jody girl. Now, I get the difference and I recommend saving paper. Behind all docs are the people who make them come alive. Vette the people not the docs...

As a REALTOR I know the difference and explain it to my clients.

We do not even accept prequal letter. Sorry.....