Pre-Qualify VS. Pre-Approval. What’s The Difference?
1. Pre-qualifying – this is an estimate of how much credit you’re likely to be approved for. The lender will review your credit to determine “creditworthiness”. You will provide income and asset information but will not provide documentation to verify the numbers.
Benefits – a pre-qualification will give you a high level understanding of your potential purchase power based on your current financial situation. This can also be used to identify areas of improvement financially.
2. Pre-approval – This will generate a commitment to lend X amount of dollars based on a full review of income, assets, and credit by an underwriter.
Benefits – Pre-approval letter is like having cash in hand. This lets sellers know you’re serious and have access to financing lined up. This will also allow you to better understand your ideal price point and build a budget accordingly.
