What is the difference between mortgage pre-qualification and mortgage pre-approval?

Mortgage Pre-qualification is an informal way to see how much you "might" be able to borrow. You can be 'pre-qualified' over the phone with no paperwork by telling a lender your income, your long-term debts, and how large a down payment you can afford. Without any obligation, this helps you arrive at a ballpark figure of the amount you may have available to spend on a house.

This is an information application. This process is important and you must be honest your lender or mortgage broker. This will give you an idea of how much you can afford to purchase, and an ball park figure of your monthly mortgage payments. Once you know how much you can afford, then you can search for homes that within your price range.

Mortgage Pre-approval is a lender's actual commitment to lend to you funds to purchase real estate. It involves assembling the financial records and going through a preliminary approval process. A Mortgage Pre-approval gives you a definite idea of what you can afford and shows sellers that you are serious about buying.

This step normally involves checking your credit report, submitting paycheck stub, submitting your tax reports, and other financial documents.

Once you have found a home you are interested in buying, to finish the approval process you will need to submit the inspection report (most lenders), appraisal and property survey.

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