What’s The Difference Between Being Pre-qualified & Being Pre-approved for a Loan?
When you’re pre-qualified for a loan, it means that, assuming all the information you provided about your finances such as your employment history, salary, the amount of money you have for a down payment and so forth is accurate, you have the potential of getting a loan for the amount stated on your prequalification letter. Generally, banks and other lending institutions will pre-qualify you for a loan for free.
When you’re pre-approved for a loan, it means that your employment history, your salary, the amount of money you have for a down payment, your credit score and all other pertinent financial information has been verified. You are approvedfor a loan for the amount that your pre-approval letter states. Generally, banks and other lending institutions charge a fee of several hundred dollars for pre-approving you for a loan. Usually, the pre-approval fee can be applied towards your closing costs.
If you are truly ready to buy within the next 90 days, getting pre-approved for a loan will save you time, and will give you a leg up if you find yourself in a bidding situation with another buyer who is not pre-approved. Also, many sellers require that you are pre-approved before they will allow you to view their property, ensuring that a potential buyers inability to qualify for a loan will not jeopardize a possible sale.
