Pre-Qualifying vs. Pre-Approval

According to generally accepted industry definitions, a pre-qualification letter simply indicates a cursory review of your financial situation while a pre-approval letter shows that the lender has made a thorough enough analysis of your income, assets and credit and can conditionally approve you for a specified loan amount. The pre-qualification process is quicker than the pre-approval process and is often the first step in getting a pre-approval, as it can be issued while information and documentation is being submitted and verified for the pre-approval.

In actual use, the definitions of each term are somewhat flexible -- the meaning of "pre-approval" and "pre-qualification" varies from place to place, lender to lender, and who you ask. Neither a "pre-approval" nor a "pre-qualification" are seen as absolute loan commitments. A final approval requires a satisfactory property appraisal and title review and no change in financial condition, whereupon a loan commitment allocates funds for the loan.

Getting pre-qualified and/or pre-approved by a reputable mortgage company is the first major step in buying a property, and should be done before you actually start your property search, as it will tell (or confirm to) you what price range in which to be looking for property.

Click here for article discussing the differences in more detail or click here if you want to get Pre-Approved now.
 
 
 
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