Did you know there is a difference between getting pre-qualified for a loan, and being pre-approved for one? Many people are a bit surprised to learn they are not the same. Let's look at the difference right now:
Pre-qualified: Pre-qualification is a very useful procedure for determining how much you might qualify to borrow. An individual can pre-qualify online in a very short amount of time, making it extremely convenient for someone shopping for a loan. Here's how it works: before you actually apply for a loan, you provide some basic information about your income, assets, and liabilities. Experienced online companies often make it an easy procedure to enter the necessary information on their website in a few seconds. Based on the information you have provided, you are quickly informed of how much you might qualify to borrow. Since this is a tool for your benefit, of course, it is to your advantage to provide information that is as accurate as possible. Pre-qualification does not guarantee you of a loan.
Pre-approved: Pre-approval means that you have provided information on your income, assets, and liabilities, and the information has been verified. Your credit report will have been checked out. This, by the way, is why it is a good idea for you to see the exact same credit report the lender is seeing. Companies which help you find the best lender online may enable you to receive a copy of your credit report at no extra charge through their website as well.
Getting pre-approved means that you are likely to be approved for a mortgage at a certain amount.
Getting pre-qualified or even pre-approved doesn't always guarantee that your loan will actually go through. This might be the case, for instance, if there is incorrect information about the loan shopper's economic situation that goes unchanged. Pre-qualification and pre-approval are constructive steps toward getting the best loan, however. They're a positive part of the entire process that leads to a borrower ending up in his or her home of choice.
