Pre-Qualified or Pre-Approved – What’s the Difference?
Did you know…?
Being Pre-qualified is not the same as being pre-approved.
When you are looking to build a home and want to know what you can afford, it’s best to get pre-approved for a loan not just pre-qualified. They may sound similar, but they are not the same. When someone is pre-qualified it essentially means they had a conversation with a lender about the state of their finances, no documents were exchanged.
Being pre-approved means a lender checked all necessary documentation needed to be approved for a loan, i.e., tax returns, banks statements, pay stubs, credit report, debt to earning ratio and more. If everything checks out, the lender will give you a written statement for financing up to a certain loan amount. This pre-approval is good up to 90 or 120 days – depending on the lender.