Pre-qualification vs. pre-approval for a mortgage

It’s summer and the real-estate market is getting hotter. Fear that the historic low mortgage interest rates will begin to go up, also putting added pressure on the market. So, it is obvious that pre-approval hold the edge over pre-qualified when shopping for a home.

What is the difference between pre-qualified and pre-approved? Pre-qualification is a simple process that may take only hours to complete. You will be working with a mortgage professional that will get basic information including information about yourself, how long you lived in the current home, and basic financial information. Based on the information you provide, mortgage professional may run your credit and give you an estimate how much the lender is willing to loan you. This is pre-qualification.

However, pre-approval takes longer to process and in addition to basic information about yourself proof of income, employment, your assets, and other information such as copies of two years of Federal income tax returns may be needed. They will run your credit and may verify your information including employment. Additionally they may obtain 4506 verification of your tax filings. If you are self-employed, they will also ask for copies of corporate tax filings. Only then they will tell you how much they are willing to lend you.