Whats the difference between pre-qualification and pre-approval?
There are two general steps in the loan process: pre-qualification and pre-approval. Pre-qualification is the process that gives you “a good idea” of how much you could afford, or “qualify for”, after looking at your credit, income, and other factors. Pre-approval is the process where the lender determines the actual amount of money they will lend you after verifying your credit, income, and other factors considered during the pre-qualification period. You will be in a much stronger bargaining position when you make an offer on a home if you have been pre-approved for your loan.
A pre-qualification is just a loose opinion from a lender as to how much they think you should be able to afford. All you have to do to get pre-qualified is talk to a lender over the phone and discuss your financial situation. The lender then tells you that you’re pre-qualified for a certain loan amount. We do the same thing online with our tool: How Much Can I Afford. A pre-qualification may not take into account some of the more detailed aspects of your situation. It’s great for a quick idea about how much house you can afford but it’s not very helpful to your real estate agent or to anyone selling a home. These people want you to be pre-approved. Pre-approval is more involved than pre-qualification. More detailed questions are asked and your credit history is checked. We offer free pre-approvals and free pre-approval letters. Just contact us.
