What is the difference between a prequalification and a pre-approval application?
A prequalification is typically the result of information shared between a mortgage lender and a potential borrower. It usually does not involve a credit report or verification of any information obtained. The end product for a prequalification analysis will be an estimate of the maximum mortgage amount for which you may qualify. A mortgage loan pre-approval application typically results in a written loan decision following a complete mortgage application, with a specific loan amount. Many lenders will require an upfront fee to cover the expenses such as the credit report and the credit analysis. You can typically apply for a pre-approved mortgage prior to signing a purchase agreement for a home. Many lenders will also allow you to lock in an interest rate at the time you apply for a pre-approved mortgage. A pre-approval can also add to your negotiating strength when you are ready to make an offer on a home.
