Pre-Approval Letter vs.
Many people ask what the difference is between being pre-approved and being pre-qualified by a lender. In a nutshell:
A pre-qualification is an unverified, free test run of the loan application process. The lender uses the person's income, monthly debts, credit history and assets information as well as electronic reporting to verify the person's credit worthiness and estimate what the person can afford for a mortgage payment.
A pre-approval is a firmer commitment by the lender based upon a complete application with a fee, credit check and employment verification. A person who qualifies receives a letter that says that a mortgage loan is approved for a certain amount of money (or for a certain property) and for a certain amount of time, subject to appraisal of the property.
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