Pre-Approval vs Pre-Qualification

A Pre-Approval presents a powerful tool for you toward the purchase of your new home with minimal surprises and disappointments. It presents you as a “cash” buyer to the seller.

Pre-Qualification

Pre-Qualification means there have been loan calculations made that show how much you “may” be able to borrow. While pre-qualification can reduce the processing time for home loans, indicate how much house you can afford and provide certain leverage in bargaining power; it doesn’t necessarily guarantee that such a loan will, in fact, be made by a lender.

Pre-Approval

Pre-Approval means you actually have a loan waiting, subject only to finding the home and the home appraising at the sales price. The “pre-approval” letter represents an actual commitment on the part of the lender. In order to secure such a letter it is necessary to complete a formal loan application and pay the associated fees. Credit, salary and bank funds will be checked and if the loan is a good investment, the lender will issue a pre-approved letter, which provides a commitment for a limited period of time, subject to a satisfactory property appraisal and title search.