What is the difference between pre-qualification and pre-approval?
Here are two key terms you'll come across during the home-buying process, pre-qualification, and pre-approval:
1. Pre-Qualification
Pre-qualification is the initial step in assessing your borrowing capacity. It's a simple process where a lender evaluates your financial information based on the answers you provide regarding your income, expenses, and debt. Based on this information, the lender gives you an estimate of how much you may be able to borrow. Pre-qualification is usually a quick and straightforward process, that can be done online or over the phone.
2. Pre-Approval
Pre-approval is a more formal and comprehensive process. It involves a detailed analysis of your financial information and requires you to submit a mortgage application. During pre-approval, you'll need to provide documentation to verify your income, employment, and assets. The lender will also check your credit score and history to assess your financial credibility. If you meet the lender's criteria, they will provide you with a written pre-approval letter. This letter states the amount you are qualified to borrow and the terms of the loan. It's important to note that pre-approval does not guarantee approval for a mortgage, as the lender still needs to review the property and other factors before finalizing the loan.
Hope this guide was helpful! Please do not hesitate to contact me at 647.930.1888 or email info@timsold.com for all things real estate.
