Is pre-qualify different than pre-approve?

Many people think they are interchangeable, but they really are not. A Pre-QUALIFY is generally that you've spoken to a lender, they may have pulled credit, and it looks like you should be OK to get a loan. A Pre-APPROVAL is when you also supply the supporting documentation to the lender (W2's, pay stubs, bank statements), and the lender reviews those items for accuracy. NO ONE should spend even a moment with a real estate agent based on just a pre-qualify... In MN and WI, get a full pre-approval for free at www.MortgagesUnlimited.biz

They are pretty much the same. Some will say that a pre-approval is based on provided documents to verify income, etc.. and a pre-qual is just what you put on the application and credit pull.

They are 2 different things. A "pre qual" is generally based on a credit report, maybe some documentation, often just a phone call and then reviewed by a loan officer. Then it is a fire drill once a contract is accepted. We generally pre approve our clients. We collect as much documentation as possible, review for any issues with deposits, tax return analysis as required,pull a complete 3 bureau credit report and run an automated underwriting program for a solid pre approval

Great Question - you are likely to get different answers from different lenders because the two terms are not officially defined by anyone. As a rule however, most would define them accordingly: PRE-QUALIFICATION - means the lender has verbally gathered your Income and Asset information and run your Credit and based on analysis of this information, he/she has determined eligibility for a loan. PRE-APPROVAL - means that the lender has also collected documentation to support the forementioned verbal data (usually 2 years taxes/W2/1099s, 30 days pay stubs, 2 months bank statements, last quarterly 401k and child support if applicable) and analysed to support an approval. Remember - A Loan Officer/Originator is not authorized in most cases to approve a loan - an underwriter is the only person that can do this on Agency loans. This is why you want to be careful when choosing a lender and if they don't ask for this documentation up front, it may be a sign that they don't know what to ask for and don't know how to analyse it. Get a referral from your Realtor - they know the local lenders best. The worst thing that could happen to a home buyer is to be "Pre-approved" by the Loan Officer, only to be turned down by an underwriter. Good Luck!!!!

Hi Sally,The answers below are correct, however at our Bank, we classify a Pre-qualification as the Loan Officer analyzing your credit and financials and determining that based on the information provided, your ratios appear to be in line for an approval. On the other hand, at our bank, a Pre-Approval is actually reviewed by an Underwriter, run through the underwriting software system, and based on the information provided, is pre-approved. We have an Approved Designated Underwriter on-site, so we put together your complete file and our Underwriter confirms the income, reviews your credit, runs your loan scenario for pre-approval. We usually do this if your debt to income (DTI) ratios are borderline. The guidelines designate certain ratios to be met, but can sometimes be exceeded if certain compensating factors are present, such as higher credit scores, higher assets, and higher residual income (after monthly expenses). Our Underwriter sits downstairs in our branch. This makes a difference when you can communicate on a daily basis. We can lend anywhere in Arizona, and also in the states adjacent to AZ. If you need some help with your loan, I am always available by phone, if you'd like to speak to me, please call my direct office line (928) 302-5152, or my cell phone (928) 230-6065. Best Regards, Russ Ideishi, AVP, Mortgage Banker, Mohave State Bank, NMLS#405391.