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These two terms sound the same but they are different! Pre-qualification is based on just a few questions. Pre-approval is more complete.

Pre-Qualification

This is the "quick and easy" first look at your ability to purchase a home. It is simply an estimate of how much money you should be able to spend on your monthly housing payments. It is based on your current monthly debt divided by how much money you each month.

Do not mistake "pre-qualification", being "pre-qualified" or being told you "pre-qualify" as loan approval. They are not the same.

Pre-Approval

This is not a test of what you can afford. Pre-Approval means you have gone through a "pre-qualifying" process, and your file has been formally submitted to and accepted by a lender for financing. If you have not submitted income and bank account information then your "pre-approval" is conditional, subject to receipt and acceptance of income, bank account and other information. It is usually referred to as "conditional pre-approval".

Unconditional pre-approval means you have met the above criteria and you have provided all documents necessary to clear all conditions relating to your income, assets and credit. The only thing remaining is finding the right home and negotiating a purchase. Having an unconditional approval is a good as shopping for a home with your check in hand. You become a CASH Buyer and have more negotiating clout with the seller. Being a Cash Buyer is especially advantageous when multiple offers are presented to the seller.

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