Pre-Qualified vs Pre-Approved
Before you begin looking for a home, meeting with a mortgage lender to determine if a pre-qualification or a pre-approval best fits your situation can help you in the home shopping process.
A pre-qualification is the process in which the mortgage loan originator reviews the income, debt, assets, credit history and monies available for down payment and closing costs provided by the potential borrower.
From this information, the Mortgage Loan Originator is able to confirm the amount and type of loan available to the borrower. The borrower may request a pre-qualification letter, which provides you with an understanding of your lending capabilities.
When purchasing a home, it can be advantageous to get pre-approved for a mortgage.
A pre-approval takes the prequalification process one-step further. A loan application must be completed, which is required in order to be pre-qualified. The mortgage lender will review the following information: income, debt, assets, confirmed monies available for down payment and closing costs. A credit report will be run and the borrower may request a pre-approval letter which is subject to additional documentation and property approval.
Please note that a pre-qualification or pre-approval does not constitute a loan approval. These approvals are based on information provided by you. A comprehensive analysis of your credit history, income, debts and property selection is required to provide a final loan approval.