Pre‐qualification is an informal way to see how much you maybe 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.
Pre‐approval is a lender’s actual commitment to lend to you. It involves assembling the financial records mentioned in Question 47 (Without the property description and sales contract) and going through a preliminary approval process. Pre‐approval gives you a definite idea of what you can afford and shows sellers that you are serious about buying.
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