What is the difference between pre-qualifying and pre-approval for a mortgage loan?
Pre-qualifying basically means that the banker ran a credit check on you to make sure you can get a loan and then took informaiton you provided on your income to determine how much house you can afford. This enables them to give a rough idea of how much of a mortgage you are qualified to apply for. It really holds little value as the mortgage broker does not verify what you tell him/her about your income and source of downpayment. A pre-approval involves actually verifying your credit, down payment, employment history, etc. Your loan application is submitted to an underwriter and a decision is made regarding your loan application. Getting your loan pre-approval allows you to close very quickly when you do find a house. A pre-approval can help you negotiate a better price with the seller, since being pre-approved is very close to having cash in the bank to pay for the house! If you can get a pre-approval letter, your offer will be viewed far more favorably.
