What is the difference between a pre-qualification and a pre-approval?
• A pre-qualification is a 15 minute phone discussion with me going over what you can afford and getting a statement in writing verifying your borrowing ability. • A pre-approval is actually applying for a mortgage without having identified a property yet, in order to receive a loan commitment letter from a bank and be in the strongest bidding position. There is also no cost in getting pre-approved.
Pre qualification is simply an opinion by a lender or one of their representatives (usually a loan officer) that based on information you have provided covering your income, assets, and debts, and given current market interest rates, you qualify for a loan of some specified amount. If any of the information you provide turns out to be different, or if interest rates increase, the opinion is subject to revision. Pre approval is designed to make it easier to shop for a house and does involve a commitment by the lender to make a loan prior to the identification of a specific property. On a pre approval, unlike a pre qualification, the lender verifies the information you provide and has checked your credit.
