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Glossary:
Get help understanding the terms.
What is the difference between pre-qualifying
and pre-approval? |
A pre-qualification is normally
issued by a loan officer, who, after interviewing
you, determines the dollar value of a loan you can
be approved for. However, loan officers do not make
the final approval, so a pre-qualification is not
a commitment to lend. After the loan officer determines
that you pre-qualify, he/she then issues you a pre-qualification
letter. This pre-qualification letter is used when
you are making an offer on a property. The pre-qualification
letter indicates to the seller that you are qualified
to purchase the house you are making an offer on.
Pre-approval is a step above pre-qualification.
Pre-approval involves verifying your credit, down
payment, employment history, etc. Your loan application
is submitted to an underwriter and a decision is made
regarding your loan application. If your loan is pre-approved,
you are then issued a pre-approval certificate. Getting
your loan pre-approved allows you to close very quickly
when you do find a house. A pre-approval can help
you negotiate a better price with the seller, since
being pre-approved is very close to having cash in
the bank to pay for the house!
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