What’s the difference between pre-qualification and pre-approval?
A pre-qualification is an informal estimate of your home buying power, based on unverified information. The lender isn’t promising to issue a loan.
A mortgage pre-approval takes you through an underwriting process. Your employment and financial information will be verified. Once the underwriting process has been completed, you’ll be issued one of the following decisions:
- Approved with conditions
- Suspended (more info required)
It’s far better to discover any issues with your financing before you make an offer on a home! This gives you the opportunity to resolve any credit problems – and reapply – before you have a home on the line
If you are approved, the lender will issue a loan agreement letter, good for a certain period of time. This pre-approval letter can be submitted with your purchase offer as proof of financial readiness. Ask me for a mortgage lender referral!