How are pre-qualifying and pre-approval different?
Pre-qualification is an informal way of presenting the amount you may be able to borrow.
You can be ‘pre-qualified’ over the phone with no paperwork by telling a lender your income, your long-term debts and the size of down payment you can make.
Without any obligation, this helps you to arrive at a ballpark figure of the amount you may be able to spend on a house.
Pre-approval is a lender’s actual commitment to lend to you.
It involves assembling financial records and performing a preliminary approval process.
Pre-approval gives you a definite idea of what you can afford and shows sellers that you are serious about buying.
