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Getting Pre-Qualified for a Mortgage

Getting pre-qualified for a mortgage helps give you an idea of how much you might qualify to borrow. But since you have not actually applied for a loan, and the lender only has your word on your credit, income, assets and liabilities, a home loan or mortgage amount is not guaranteed. With a pre-qualification, no information has been verified. If you receive a letter from the lender, it may only state that you are likely to be approved for a mortgage.

Getting a pre-qualification is easy and fast but it is not as strong as a Pre-Approval.

Getting a Pre-Approved Mortgage

A pre-approval goes one step further than a pre-qualification. When getting pre-approved, you may receive a letter stating how much you qualify to borrow. Your lender will pull your credit report and find out what liabilities you have. However, not everything (namely your income and assets) is verified.

Pre-approvals don't always guarantee financing since the buyer's information has not been verified. Think of it this way: a mortgage pre-approval is like getting a pre-approval letter in the mail for a credit card. You can't go to the store and buy anything with that letter—you have to have the approved credit card. Having a firm mortgage approval is like having the actual credit card.

Summary

A Pre-Qualification Letter is good but a Pre-Approval Letter is even better and maximizes your chances of having your offer accepted.