Here Henry Barr explains when a pre-qual letter is needed and the difference between a pre-qual letter and a pre-approval letter…
I’m Henry Barr at The Barr Team here at REMAX Properties of the Summit in Frisco Colorado. I just want to answer some questions that come up about a pre-qualification letter, or a pre-qual letter and a pre-approval letter, they are different so make sure you understand the differences on a pre-qual. Basically it’s just very preliminary, cursory review from a lender stating whether or not the information that you provided will allow you to qualify for the mortgage you are asking for. It’s not the same as a pre-approval letter which is much more detailed. A pre-approval letter basically says that your financial situation has been checked out and verified and the only thing that you are waiting on is probably the appraisal. So a pre-approval letter is definitely better than a pre-qual letter, but most sellers ask for a pre-qual letter to start things off instead of a pre-approval letter. When do you need it? As soon as possible. In the Denver market it is not uncommon for people to carry their pre-qual letter around with them at all times so anytime they submit an offer they can submit their pre-qual letter right away. Being Summit County with so many second homebuyers and absentee buyers that’s usually taken care of in the offer where we give the buyer 2-3 days to come up with the pre-qual letter from the date that it goes under contract. So it’s not as critical up here as it may be in some of the Front Range cities. But I recommend to have it as soon as possible, the sooner the better and if you can submit it with your offer, that’s great.