Pre-Qualified Vs. Pre-Approved – What’s The Difference?
Misunderstanding the notion that if a lender pre-qualifies them for a mortgage or that they have been pre-approved for the home loan can mean disaster for borrowers. Pre-Qualified vs. Pre-Approved – What’s The Difference? Advantage of completing both of these steps – pre-qualification and pre-approval – before you start to look for a home is that you’ll know in advance how much you can afford.
Getting pre-qualified is the initial step in the mortgage process. This process gives your overall financial picture, including your debt, income and assets. Loan pre-qualification does not include an analysis of your credit report or an in-depth look at your ability to purchase a home. A pre-qualification will give you an idea of the size of the mortgage for which you qualify.
Getting Pre-approved is when a lender can tell you the specific mortgage amount for which you are approved. Getting pre-approved tends to be much more involved. You’ll complete an official mortgage application, then supply the lender with the necessary documentation to perform an extensive check on your financial background and current credit rating. The lender will be able to receive a conditional commitment in writing for an exact loan amount mortgage amount that you have been approved for.