What Is The Difference Between Prequalified and Preapproval?
A prequalification is when the bank runs your numbers and determines how much of a mortgage loan you can get. This is based on the income figures and the debt figures you provided. It’s a nonbinding agreement that can be done very quickly to give you a general ballpark figure of how much home you can afford. This service is usually free.
Preapproval is one step further along. The lender actually verifies the income and debt figures you provide and then gives you an actual letter saying that you will be guaranteed a mortgage for a certain amount of money. Usually the preapproval letter expires after a set period of time, usually 30-60 days. A preapproval may cost a small fee, but this may be refunded after the home purchase is finalized.
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