Mortgage Pre Approval

Pre-approval not to be confused with pre-qualifying means formally applying for a loan just as if you were obtaining any loan. This means doing the loan paperwork early (e.g., credit and employment history, income, assets, expenses, tax returns, and so on). When you’re pre-approved, you’ll have a commitment in advance from the lender to give you a specific loan at a locked interest rate. It also gives you a hands-down advantage in negotiating with the seller over someone who is estimating his or her "borrowing" profile.

Pre-qualifying, on the other hand, is informal and can be done fairly quickly — by telephone in many cases or e-mail. This process gives you an idea of whether you are likely to qualify for the loan you want, although the actual approval is not granted until all the paperwork is in, the facts you stated when pre-qualifying check out, and nothing inconsistent is uncovered.Many use the terms pre-qualification and pre-approval interchangeably. While both give some indication of whether or not a potential home buyer can obtain a mortgage for a certain amount, there are significant differences between the two, which are important for a potential home buyer to understand.