What is the difference between Prequalification and Preapproval?
Prequalification. When you get prequalified it means that you have talked with a lender and, based on the verbal information you provided, the lender is willing to provide a written statement showing that they believe you would qualify for a loan. This proof of funds is not as strong as a Preapproval. Preapproval. This is a more serious way to prove that you have the resources necessary to obtain a loan. When you get preapproved for a loan you will be submitting a formal loan application and the lender will verify your credit, your employment, your payment history, etc. After a full preapproval is done, an appraisal on the property to show that it is worth at least the amount of the loan will be required to finilize the loan. A preapproval letter with no contengencies is a much better way to prove to a seller that you are ready to purchase the property.
