Is there a difference between a pre-approval and a pre-qualification? The simple answer is yes there’s a big difference. Read below and find out what the difference is and why it matters when you’re buying or selling a home.
What Is A Mortgage Pre-Approval?
For starters a mortgage pre-approval is not a guarantee you will get the loan but, it’s the closest you can get to that guarantee. There are still conditions such as locating a property, no change in your creditworthiness, and likely a satisfactory appraisal that will have to be met. The appraisal can vary in some cases. Aside from that, the pre-approval being issued means the lender has run your credit, verified your income, verified your employment, and reviewed your financial resources such as savings or retirement accounts.
What Is A Mortgage Pre-Qualification?
A pre-qualification means a lender has given an estimate of what you may qualify for based on the information you have provided. The lender may or may not run your credit. Verifying income, employment, and financial resources is not part of a pre-qualification. It simply gives you an estimate of how much you can borrow.
What’s The Difference In Being Pre-Approved And Pre-Qualified?
Obtaining a mortgage pre-approval is a far more in-depth process. You will have completed a loan application and submitted financial documentation to your lender vs. just stating what your income is. The lender will run your credit and process the application through an underwriting process in order to then issue the pre-approval.
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