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What is the difference between pre-qualifying and a pre-approval?

April 26, 2017pre-approval pre-qualifying

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What is the difference between pre-qualifying and a pre-approval?

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A. Pre-qualifying is an informal process of determining a loan amount you qualify for. You cannot lock in a rate at this stage. Pre-approval is a formal process in which you are issued a letter of approval after you have completed a loan application and provided the loan officer with documents that are needed for the final approval and after your credit report has been obtained. The pre-approval letter will state the loan amount and terms you have qualified for.