Pre-qualification vs Pre-approval

Prequalification and preapproval are both steps that can help you determine how much you can borrow for a mortgage loan and understand what type of mortgage may be best for you. However, there are some important differences between the two.

Prequalification is a process in which a lender provides you with an estimate of how much you may be able to borrow based on information you provide about your income, debts, and assets. Prequalification is generally a quick and easy process that can be done online or over the phone. It is often the first step in the mortgage process and can help you determine how much you can afford to borrow.

Preapproval is a more in-depth process in which a lender reviews your financial information in detail and provides you with a written commitment to lend you a specific amount of money at a specific interest rate. To get preapproved, you will typically need to provide documentation of your income, debts, and assets, such as pay stubs, tax returns, and bank statements. Preapproval is typically a more thorough process than prequalification and can give you a stronger negotiating position when it comes time to make an offer on a home.

It's important to note that prequalification and preapproval are not the same as final approval for a mortgage. Final approval is typically granted once you have found a home, made an offer, and the lender has reviewed all of your documentation and conducted a thorough appraisal of the property.