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is there any difference

Posted on: 11th Dec, 2006 11:45 am
are prequalification and preapproval same?or there are any difference..thanks, Helina karimu,TX
Hi Helina,

If you get a prequalification, it only means that based on your conversation with lender it seems that you can qualify for a loan. In the conversation you provide the relevant information such as your DTI, score, what LTV is required by you. But this process does not include any documentation and lenders do not have any proof of the details you provide.

While in a pre-approval lender apart from reviewing your information as it is done in a prequalification also takes all the necessary steps regarding the documentation and review of your loan request. This process is called underwriting for approval of your credit request.

Your employment, pay stubs and tax return are reviewed to verify your income status. Your credit report is carefully checked to verify your credit worthiness.

If you meet all criterions then the pre-approval letter is given to the applicant. While on the other hand a prequalification letter is not a commitment from the lender that he will lend you based on the details you have provided. It only indicates that you are qualified to make a home purchase offer to any seller.

Hope the difference between the two is clear for you now.

Thanks
Blue
Posted on: 11th Dec, 2006 12:06 pm
I would like to add in that a pre-approval takes more time than a prequalification as you are required to actually submit your application for the loan.

And in addition the approval is almost always subject to your getting an appraisal of the property you are going to purchase meeting lender's guidelines.
Posted on: 11th Dec, 2006 12:30 pm
Hi Guest,

Prequalification and Pre-approval are important stages in the loan process. When you pre-qualify with a lender, you get to know that you may qualify for a loan on the basis of your income and credit. And, pre-approval takes you a step ahead with the lender actually approving your loan.

You can go through our section on Pre-qualification and Pre-approval. It will give you a better idea on the actual process involved.

Thanks,

Sara
Posted on: 11th Dec, 2006 10:35 pm
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