What is the difference between pre-qualification and pre-approval?
It just makes sense for the borrower to determine what house price
they can afford before spending time looking for a new home. Loan
officers help borrowers discover what is an affordable home price
by asking the borrower a series of questions. These questions include
the amount and source of the borrower’s income, the amount of other
debt obligations, and the borrower’s history of paying those debts.
Based on the borrower’s answers, the loan officer can offer an opinion
as to whether the borrower would qualify for a given loan.
Pre-approval generally means that documentation of the borrower’s
income, assets, and credit history has been secured and submitted
to the lender’s underwriter. The underwriter is the individual responsible
for making the lending decision on the loan. Pre-approval is considered
a stronger indication of the borrower's ability to qualify and receive
financing.
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