What is the difference between Pre-Qualifying and Pre-Approval?
A pre-qualification is normally issued by a loan officer who will determine the dollar amount of a loan you may be eligible to receive. It is not an approval nor is it a commitment to make you a loan. Conversely, a pre-approval involves actually verifying your credit, income, down payment, etc. so that your loan request may be presented to an underwriter for a credit decision. Once you find a house, having a pre-approval letter allows you to close more quickly since much of the work on the mortgage loan has been completed.
Pre-qualifying for a mortgage up to a certain amount is a verbal exchange in which the lender tells you in advance approximately how much money the buyer is able to borrow, based upon the information you provide the lender on your debt and income. Pre-approval goes a step further than pre-qualifying. It is an actual commitment to lend, provided that, when the borrower is ready to buy, he or she still meets all the qualifying conditions that were met at the time of conditional approval. We strongly recommend it to give you the best negotiating position! Remember the possibility of other competing offers, when you formulate an offer or counter offer. The Broker and/or the Buyer may not have actual knowledge about the existence of competing offers. Therefore, the initial offer may be the only opportunity to buy. It is important to recognize there is no requirement that the Buyer be informed by the Seller or Seller’s agent of the existence of other offers before another offer is accepted.
A pre-qualification is normally issued by a loan officer, who, after interviewing you, determines the dollar value of a loan you may be approved for. But, loan officers don’t make the final approval, so a pre-qualification is not a commitment to lend. After the loan officer determines that you pre-qualify, he/she then issues you a pre-qualification letter. This pre-qualification letter is used when you are making an offer on a property. The pre-qualification letter indicates to the seller that you are qualified to purchase the house you are making an offer on. Pre-approval is a step above pre-qualification. Pre-approval involves 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. If your loan is pre-approved, you will be issued a pre-approval certificate. Getting your loan pre-approved allows you to close very quickly when you do find a house. A pre-approval can help y
