WHAT IS THE DIFFERENCE BETWEEN PRE-QUALIFY VERSUS PRE-APPROVAL?
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The Difference Between Pre-Qualify and Pre-Approval
The words pre-qualified versus pre-approved when applying for a mortgage loan sounds a lot alike, but they have two different meanings. And it matters a lot when you go to put an offer on a home.
Scroll down for a comparison between the two to find out when each one applies to you.
When your mortgage advisor pre-qualifies you for a loan, they are not collecting documentation or reviewing credit.
Pre-qualification is an informal conversation about what a borrower can potentially borrow. IF your credit score is “this” and IF your income is “this” and IF you have “this many” debts, then you can qualify for “this” amount.
Getting pre-qualified is a good first step in obtaining a loan. This informal conversation gives everyone a chance to address any red flags or issues that will keep borrowers from getting a loan. It also gives the borrower and lender a chance to review different loan options and packages.
When a borrower is pre-approved for a mortgage, the lender will have collected all necessary documentation. They will review your credit history, employment history and make sure you are in good shape to obtain the financing that you plan to use for your home purchase.
Pre-approval is what you need when you are going to purchase a property. Having this allows you to feel confident and excited and not really have too much of a worry going into a purchase contract.