Friday, March 29, 2013

Getting Pre-Qualification vs. Pre-Approval Letter

Knowing the difference between getting pre-qualified for a loan, and pre-approved for a loan equips you to have the right information at the right time. Getting pre-qualified for a loan gives you an idea of how much you might qualify to borrow. You have not actually applied for a loan and the lender has only your word with respects to your income, assets and liabilities. This information has not yet been verified and the loan amount is in no way guaranteed. You may be given a pre-qualification letter stating you will likely to be approved.

Getting pre-approved means that your information has been checked and verified. The mortgage lender may also have pulled your credit report to learn about your credit history and credit-worthiness. Getting a pre-approval letter means that you are likely to be approved for a mortgage and also states the amount for which you may be approved. It carries much more weight than a pre-qualification letter.

Many things can happen during the process-so it's important to remember that you are not guaranteed to get a mortgage if you are pre-approved or pre-qualified.

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