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

@milan.glover 

The main difference between a pre-qualification and a pre-approval for a mortgage lies in the level of assessment the lender conducts.

1. Pre-qualification: This is the initial step in the mortgage process where the borrower provides some basic information about their financial situation, such as income, assets, and debts, to the lender. Based on this information, the lender gives an estimate of how much the borrower may be qualified to borrow. It is usually a quick and informal process, often done online or over the phone, and doesn't involve a detailed documentation review or credit check.
2. Pre-approval: A pre-approval is a more rigorous process that involves a thorough assessment of the borrower's financial background and credit history. The borrower must complete a mortgage application and provide necessary documentation like bank statements, pay stubs, tax returns, and other financial records. The lender then verifies and reviews all the information provided, checks the credit report, and determines the maximum loan amount the borrower qualifies for. A pre-approval letter is a formal document issued by the lender, stating the approved loan amount and terms, which helps strengthen the borrower's position while making an offer to purchase a property.

In summary, a pre-qualification is a preliminary assessment based on self-reported information, while a pre-approval is a more substantial process involving verification and documentation review that results in a specific loan amount approval.

@milan.glover 

A pre-qualification is a rough estimate of how much a borrower may be able to borrow, based on information provided by the borrower, without a detailed verification process. It is more of an informal initial step. On the other hand, a pre-approval involves a more thorough assessment of the borrower's financial situation, including documentation review, credit check, and verification of financial records. It results in a formal pre-approval letter from the lender stating the maximum loan amount the borrower qualifies for. A pre-approval holds more weight and credibility in the homebuying process compared to a pre-qualification.