Mortgage Pre-Qualification vs. Pre-Approval- brief explainer

Mortgage Pre-Qualification vs. Pre-Approval- brief explainer

What is a Pre-qualification: an estimate of your purchasing budget. Brief process assessing your budget after a soft-credit pull.

What is a Pre-approval: a more detailed review of your finances; including a hard credit pull, and documentation of your income and assets. This process can take up to a week. Pre-approval letter is issued, detailing your purchase price and information about the type and terms of the mortgage loan that you qualify for. Typical required documentation includes:

Social Security number
Pay stubs
Driver’s license
Proof of income
Bank statements
W-2 statements
Tax returns
Employment verification
Proof of assets

A pre-approval letter will include information such as: your name, the total purchase price you’re approved for, type of mortgage and the terms, your approved interest rate, your down payment amount, and expiration date of the pre-approval. The pre-approval expiration date is usually 60-90 days after receipt of your pre-approval letter.

Pre-approval letters are not a guarantee of the terms included.