Office of Loan Programs
Pre-approved vs. pre-qualified
- What is the difference between pre-qualified and pre-approved?
A pre-qualification letter is simply a cursory review of your financial situation while a pre-approval letter shows that the lender has made a thorough analysis of your income, assets and credit and has pre-qualified you for a specified loan amount.
- Why should I get pre-approved?
In order to get the best possible start in your home-buying process, it's best to obtain a loan pre-approval before you actually start looking for a home to purchase. A pre-approval from your lender shows that you have a solid credit history and that you are qualified for a mortgage loan of a specified size. In a competitive market, a pre-approval letter can provide greater negotiating clout with the seller, as well as provide assurance that your offer will have priority above those who are not pre-approved.
- What information will I need to provide for a pre-approval?
Generally, the lender will want you to complete a standard residential loan application or, you just may be asked to provide the following documentation. Also, the lender will order a credit report to determine if there are any unusual or derogatory items in your credit history which may require additional explanation
- previous two year's history of your residence, employers & income sources, and copies of W2 forms.
- copies of the most recent three month's bank statements, verification of stocks & bonds, and market value of any other real estate owned.
The greatest benefit to having a pre-approval letter is that it takes the stress out of shopping for a home. You'll be able to concentrate upon finding your dream house, without the worry of wondering if you've met the lender's financial requirements.