What is the difference between pre-qualifying and pre-approval for a mortgage?

Pre-qualifying and pre-approval for a mortgage are two important steps in the home buying process in Washington. While both steps involve a lender making a commitment to finance a home, they are different. Pre-qualifying is the first step in the mortgage process and is relatively simple. During pre-qualifying, a lender will review your income and credit history to determine an estimated loan amount and interest rate you may qualify for. Pre-qualification is not a commitment from the lender to approve your mortgage loan. Pre-approval is the next step and is more detailed. During pre-approval, a lender will review your credit, income, assets and debts to provide an estimate of the maximum loan amount you may qualify for. The pre-approval process also includes a review of your financial documents such as tax returns and bank statements. With a pre-approval, the lender is making a commitment to approve the loan up to the specified amount as long as the financial information remains the same and the property appraises for the amount being requested.

Related FAQs

What is a prepayment penalty?
What is the difference between fixed-rate and adjustable-rate mortgages?
What is the effect of pre-payment penalties on a mortgage?
What are the pros and cons of taking out a mortgage?
What is an "assumption" mortgage?
How can I reduce the costs of my mortgage?
What is an adjustable rate mortgage (ARM)?
What is private mortgage insurance (PMI)?
What are the different types of mortgage loans?
How do I know if I have a good mortgage loan offer?

What is the difference between pre-qualifying and pre-approval for a mortgage?

Related FAQs

Related Blog Posts