Is There a Difference between Pre Approval and Pre Qualification for Mortgage Loans?

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What is pre-qualificaton?

Pre-qualification is the estimate of how much a borrower can afford in a mortgage payment. It is affected by a number of factors and is subject to approval, which depends on the credit report appraisal, income verification, all of which will be verified in the pre-qualification process.

What is pre-approval?

Pre-approval comes with more commitment from the Lethbridge mortgage company and includes a credit and employment check. It is basically the same as the approval process but without the appraisal and the title search. During this process, both the lender and the borrower get an idea of how much the borrower can afford in mortgage, and this is where the buyer completes a formal mortgage application. This is where the mortgage company checks if the applicant has been late in making payments in the past. The borrower may also need to provide tax information as well as statements of assets and properties. From the information provided, the lender can inform the borrower the specific mortgage for which he or she is qualified.

Importance of pre-mortgage qualification

Pre-mortgage qualification is one of the essential steps when getting a mortgage loan. It is a good way of finding out how financially capable a borrower is. Pre-qualification and pre-approval are important because these allow a borrower to shop for homes with more certainty since he or she has been deemed qualified for a mortgage loan. Qualification also makes the process of buying a home quicker.