How accurate is a pre-qual letter?

Question

Hi everyone,

I just have a quick question for those that got pre-qualified before getting a loan. The pre-qual letters shows the amounts approved for and the interest rate. How likely is that you will get the noted interest rate or very close to it when actually applying for the loan?

Carlos O.

Wayne Brooks · Answer

The quoted interest rate is Not meant to be any type of lock.  It is merely stated as the rate that was used to qualify you.

Adam Moehn · Answer

The interest rate will be whatever the going rate is at the time when you lock it in, which will typically be after you have an accepted offer. It could be higher or lower than the rate now.

Keep in mind that just because you have a prequalification or preapproval from one bank doesn't mean you couldn't decide to use a different one when it comes time to actually get the mortgage if you find a better deal elsewhere.

Carlos O. · Answer

So, would the approval letter hold more weight? What I am really trying to get at is, what if you have an approval letter with a stated interest rate of 4.5%. Assuming stable interest rates and loan is opened within 30 days or so of the letter, would this rate be very close to the loan rate. What I would like to avoid is having a lender say 4.5% and then bouncing the interest rate up .75% or 1% (or more) during the loan process. I'm asking because I haven't taken out a loan or dealt with lenders much. So I don't have a good idea of what is normal and what isn't in regards to the interest rate I would get with lenders.

Jon Holdman · Answer

A pre-qualifiation letter is really weak. It means essentially nothing.  A pre-approval letter has more weight behind it because the borrower has actually gone through the approval process.

The interest rate is going to vary with the market until you actually lock it.   Rates have been pretty stable lately.  But that's not always the case.

Jeff Trevarthen · Answer

@Carlos  O. I agree with @Wayne Brooks .   I write these often, and I never write the interest rate in the letter.  The interest rate is just the rate used to qualify.  Interest rates fluctuate too much to try to estimate what it will be once you finally get under contract.

Peter MacKercher · Answer

Of course it depends on your lender. Most of my clients have gotten really close to their pre qualified letter.

How accurate is a pre-qual letter?

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