Pre-Qualification is only a loan agent's opinion that you'll be able to obtain financing. No verifications are made, so formal approval is not issued.
Pre-Approval means your loan application has been taken through a rigorous procedure. Pre-approval saves you the time of looking at houses you can't afford.
Pre-approved buyers are ahead in the home buying game. If you make an offer on a home and then apply for a loan instead of the other way around, you are at mercy of the lender who now knows that you don't have time to shop around.
A pre-approval letter from a lender will also give you an edge when multiple offers have been made on a house. Pre-approved buyers generally close escrow more quickly, since most of the paperwork has already been taken care of.
Mortgage Overview
When considering your financing options, you'll want to review many different things about the loans offered to you. In this next section you'll find a basic overview of home loan features and the things you should consider as you shop for a lender or loan.
What kind of lender are you borrowing from?
Home loans are available to consumers from thrift institutions-commercial banks, mortgage companies, credit unions and mortgage brokers.
A Mortgage Broker is unlike other lenders in that the broker does not lend money to you directly. A broker will help find you a lender and secure the terms of your arragement.
Mortgage Broker VS. Traditional Lender
A Broker may have access to several lenders and therefore can offer you a wider selection of loan products and terms. He or She can help you shop for the best deal based on your circumstances. (A Broker is not obligated to find you the best deal possible, so be sure to ask questions.)
For their work, brokers are paid a fee in addition to the lender's origination fees. Brokers set their own compensation, so you'll need to ask anyone you speak to how their fees are determined.
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