Pre-Qualification vs Pre-Approval

If you are considering purchasing a home and require lender financing, it is important to know that there is a big difference between a pre-qualification letter and pre-approval letter.


  • Pre-Qualification means there have been loan calculations made that show how much you “may” be able to borrow.  While pre-qualification can reduce the processing time for home loans, indicate how much home you can afford and provide certain leverage in bargaining power, it doesn’t necessarily guarantee that such a loan will, in fact, be made by the lender.


  • Pre-Approval means you actually have a loan waiting, subject only to finding the home and the home appraising at the sales price.  The “pre-approval” letter represents an actual commitment on the part of the lender.   In order to secure such a letter it is necessary to complete a formal loan application and pay the associated fees.  Credit, salary, and bank funds will be checked and if the loan is a good investment, the lender will issue a pre-approved letter, which provided a commitment for a limited period of time, subject to a satisfactory property appraisal and title search.

For more information about the lender interview, download my BUYER’S INFORMATION GUIDE (…8 Steps to Your New Home).

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