pre-approval vs pre qualification

[Havan Surat]

what is the difference between pre approval and pre qualification in lending? 

[Account Closed]

Quote from @Havan Surat:

what is the difference between pre approval and pre qualification in lending? 

Good question.


Pre qualification means you have a phone conversation with a lender, they asked you a bunch of questions and from that conversation decide on about how much you would qualify for.

Pre approval means you have had the above conversation and had your credit pulled, sent in proof of employment, proof of income, have provided everything necessary for a loan, and the bank has verified it. From that  information underwriting has said they, as a lender will lend you a certain amount of money to buy a house if nothing changes and provide the down payment.

It's a very big difference. Sometimes people don't give correct information for a pre qualification and since nothing is verified, it's a guess as to whether underwriting will approve them for a loan.