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Pre-qualified vs. Pre-approved
When you are pre-approved, the lender has basically verified all of the information you provided for the application. This includes how much you earn, how much you owe and your credit rating or FICO score. You will most likely be charged for this service. A letter of pre approval is furnished to you by the lender and this puts you in a much stronger position when purchasing a new home as the seller knows you are pre approved and are thus qualified to buy a new house. The reason the term "pre" is used is because it happens prior to actually finding a home. Many years ago lenders would only allow buyers to apply for a loan once they had actually found a new home. |