Office of Loan Programs
University of California
Office of the President
1111 Franklin St., 6th Floor
Oakland, CA 94607-5201
A pre-qualification letter is simply a cursory review of your financial situation while a pre-approval letter shows that the lender has made a thorough analysis of your income, assets and credit and has pre-qualified you for a specified loan amount.
In order to get the best possible start in your home-buying process, it's best to obtain a loan pre-approval before you actually start looking for a home to purchase. A pre-approval from your lender shows that you have a solid credit history and that you are qualified for a mortgage loan of a specified size. In a competitive market, a pre-approval letter can provide greater negotiating clout with the seller, as well as provide assurance that your offer will have priority above those who are not pre-approved.
Generally, the lender will want you to complete a standard residential loan application or, you just may be asked to provide the following documentation. Also, the lender will order a credit report to determine if there are any unusual or derogatory items in your credit history which may require additional explanation
The greatest benefit to having a pre-approval letter is that it takes the stress out of shopping for a home. You'll be able to concentrate upon finding your dream house, without the worry of wondering if you've met the lender's financial requirements.