It's my understanding that a prequalification typically informs a consumer of an estimated PITI payment that would be considered affordable for them based on their employment history, income and other debt payments. The income may be "stated" or documented via paycheck voucher and/or W-2s, if the consumer happened to bring them in and the debt payments may be "stated" or the MLO might, with permission, pull a credit report. In other words, an informal, verbal or face-to-face conversation. A preapproval is more formal requiring the consumer to complete a 1003 with information other than property address, and an estimated property cost, provide paycheck vouchers, W-2s and tax returns, 2 months of bank and/or investment account statements, and authorization to pull a credit report.
Assuming my understanding is correct, which does your shop offer? Are prequalification letters accepted by Realtors and sellers in your area, or do they require a preapproval?
If a consumer were to state they want to purchase a property costing $100,000, they have $2,000 in liquid assets and "hope" to get down payment assistance (DPA) for the balance of funds needed to close, does your shop require a commitment for the DPA or condition the preapproval (assume excellent credit and sufficient income)?
Thank you.