Pre-Qual Vs. Pre-Approval Pre-Qualification vs Pre-Approval
For most of us, buying a home will be the biggest, most important purchase we will ever make. That is why it’s crucial to leave no stone unturned in knowing the challenges that lie on the mortgage approval landscape. One common mistake homebuyers make is failing to distinguish the difference between being pre-qualified for a mortgage and being pre-approved for one. Pre-Qualification is a lender’s estimate of how much you could be eligible to borrow based on information you supply. Pre-qualification does not mean you will get the loan. Pre-qualifications are usually free. Pre-Approval, although never guaranteed, usually means that the lender has taken extra steps in qualifying you to ensure that you will be approved for that specific loan type and purchase price with the information that you provided. Pre-approvals typically involve a more thorough look into your income, expenses and credit scores and may also include running AUS* (Automated Underwriting System).
The pre-approval will say how long it is valid for and may contain some other conditions for you to get the loan. Your lender may not require that you pay any fees except t he cost of a credit report at this time. In short, being pre-qualified for a mortgage doesn’t mean you will get one. But with pre-approval, you’re much more likely to get the green light from your lender.
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