Mortgage pre-approval or pre-qualification, what's the difference?

 Are you pre-qualified or pre-approved for your home loan?

Before you begin to shop for a new home, you should set aside time to with us, so we can figure out how much you can afford. This will put you in a better position as a buyer. That’s when it is important to understand the distinction between being pre-qualified for a loan and pre-approved for a loan. The difference between the two terms will be crucial when you decide to make an offer on a house.

To get pre-approved for a loan, we will collect information about your debt, income, and assets. We’ll look at your credit profile and assess goals for a down payment and get an idea of different loan programs that would work for you. I believe very strongly, that it is better to as much info up front, not just the minimum and assume the rest is ok, like most loan officers. This prevents problems down the road and helps assure that your loan proccess is smooth. We also run an automated underwriting approval, since this is what is required for a full approval and will discuss it's findings. We will then go over the amount you can borrow, as well as any additional conditions that may be required and answer any questions you may have. Then we will issue a pre-approval letter, but usually don't put the amount for the pre-approval because most Realtors believe that it undermines your negotiating power. I review all pre-approval letters personally before thay are sent out.