What’s the difference between pre-qualified and pre-approved on a mortgage?
Here is a good description from Investopedia. Seems pretty clear - one (qualified) is based on knowing you can get a loan and the other, pre-approved, means you actually have the loan ready to go.
Hello! It's helpful to know the distinction between the two before you start house hunting. In general, a pre-approval tends to hold more weight that a pre-qualification. A pre-qualification is fairly quick and typically involves just a verbal review of information such as income, assets and liabilities. You are then usually provided, in writing, with a ballpark figure of how much the bank would be willing to lend. With a pre-approval, documents, such as pay-stubs, have been verified and typically a credit report has been reviewed to check for credit-worthiness. You will typically receive a commitment letter stating how much the bank is willing to loan. Again, a pre-approval is generally taken more seriously than a pre-qualification, but it's important to remember that neither will guarantee a mortgage. Good Luck!
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