What’s the Difference between Pre-Qualification and Pre- Approval For a Home Loan?

In the world of real estate the terms “pre-qualification” and “pre-approval” are often used interchangeably. But they have different meanings.

What is a pre-qualification?
A pre-qualification is an estimate of how much you can afford in a mortgage payment. It is based upon the information you provide, and is subject to the approval process, including further details such as a credit report, appraisal, and income verification. The information you provide won’t be verified as part of the pre-qualification process.

What is a pre-approval?
A pre-approval is a firmer commitment on behalf of the mortgage company and is a more formal process which includes a credit check and income and asset verification.

During a pre-approval the potential mortgage broker or bank will do all the work of a full approval, except for the appraisal and title search.

A credit report will be obtained by the lender to verify your monthly payments on installment loans and credit cards, and to check whether you have a history of making your payments on time. You will also need to provide paystubs and W-2 plus statements from savings and investment accounts to verify your assets.

If you’ve been pre-approved for a loan, you can shop for a house with more certainty and less anxiety because you won’t be going through the whole process worrying about your mortgage approval.

Even though you are pre-approved remember that Lenders still need to look at property appraisals, verify information, and in many cases, re-check credit before agreeing to make a loan.


2 Years Tax returns (1040′s) all schedules
2 years W2′s for all borrowers
1 month paystubs for all borrowers
Current YTD P&L (if self-employed)
2 months ALL PAGES Bank Statements (all accounts)

Copies of All assets statements – stocks, bonds, etc.
copy of current ID

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