What Is The Difference between Pre-Qualifying and Pre-Approval?

A pre-qualification is a determination by a loan officer that a borrower meets the preliminary requirements of a loan amount and a loan program.  This determination should be based on verification of income requirements by way of pay stubs and past W-2's, asset information such as recent asset statements, and the most important item, a three bureau credit report.  After reviewing this information, the loan officer will issue a  pre-qualification letter which indicates to a seller of a property that they are qualified to purchase a house.


Pre-approval is when the loan package has been reviewed by an underwriter.  The loan is pre-approved by the underwriter subject to conditions that must be met prior to the loan closing.  When a buyer/borrower has already been pre-approved, the pre-approval letter has can put the buyer/borrower is a stronger position for negotiating a transaction.  Typically, the only information to provide will be the Purchase Agreement, appraisal, and preliminary title report.
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