Prequalification vs preapproval

[Rohit Saigal]

What are the actual differences between the two? A lot of websites claim different things so I’m now confused.

[Will Fraser]

Hi @Rohit Saigal!  Welcome to the BP forums!  A pre-qualification is a less formal ordeal altogether and, as a result, is less significant.  It simply means "I've spoken with a loan professional and what I told them sounds good."  A pre-approval usually involves providing real information to the lender and having them issue a light approval, which is then subjected to the full underwriting process.

Sometimes they are used synonymously, and sometimes pre-qualified doesn't actually mean anything at all.  For this reason I would always recommend being pre-approved with a lender and making sure the seller considering your offer knows you are pre-approved with an excellent lender (usually NOT quicken loans BTW).