What does it mean to be pre-qualified?
Getting pre-qualified for a loan gives you an idea of how much you might qualify to borrow. You have not
actually applied for a loan and the mortgage banker has only your word on your income, assets and
liabilities. None of your information has been verified, the loan amount is in no way guaranteed. You may
be given a pre-qualification letter that merely states you are likely to be approved for a mortgage.
Getting a pre-qualification is generally very fast and you can even pre-qualify for a mortgage online in only a few minutes.
What does it mean to be pre-approved?
Getting pre-approved means that not only have you given the mortgage banker information on your income,
assets, and liabilities, but your information has been checked and verified. The mortgage banker may also have
pulled your credit report to learn about your credit history and credit-worthiness.
Getting a pre-approval letter means that you are likely to be approved for a mortgage and also states the
amount for which you may be approved. It carries a bit more weight than a pre-qualification letter.
However, getting pre-qualified or even pre-approved doesn't necessarily guarantee that your loan will actually
go through. Many things can happen during the process---some lenders may give out pre-approval letters
without actually verifying your information or a borrower may not give completely accurate information
about his situation.