Real Estate agents are always trying to impress on home buyers the importance of getting at least pre-approved before looking at houses.  But some buyers just don't want to make the effort until they "find the one". 

Now those buyers are two steps behind.  Just getting pre-approved is no longer enough.  

Pre-Qualification, Pre-Approval & Loan Approved. What's the difference?


Getting pre-qualified for a loan is an easy process.  It’s just an initial evaluation of your creditworthiness.  You give the lender your approximate income, the amount of your debt and any other important details from your credit history, often over the phone.

The lender then crunches these unverified numbers to determine about how much money you might be eligible to borrow.  They may even give you a pre-qualification letter that any educated seller and his agent know isn't worth the paper it's written on.

However, all the information you provide during pre-qualification still has to be verified by the lender when you submit your actual loan application. There's no guarantee of a loan yet because your financial situation hasn't been verified.


Pre-approval means the information you've given the lender has been verified. It’s still a simple process, but a bit more involved than pre-qualification.  You'll fill out a mortgage loan application detailing your financial information like above. You'll also need to provide supporting documentation.

The lender will examine your financial situation—your credit report, your employment history, your income—and decide what interest rate and loan amount you qualify for.  Although pre-approval provides more certainty than pre-qualification, it doesn't guarantee a loan.  Preapprovals usually last for 3 month, up to a maximum of 6 months. You then need to reapply.

Loan Approved

Full loan approval doesn't take much more than a pre-approval.  You've given the lender all they need.  They just need to be willing to do the legwork and cover the expense required to prove the supporting documentation you provided.  The lender will send out verifications to your employers, ask for your tax returns and similar tasks to prove your documentation.  And they'll run your file through their credit department.

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