Pre-Qualification or Pre-Approval, What Is The Difference
So, you are getting ready to purchase a home and you need to obtain mortgage financing to do so. After you interview lenders to determine which on is the best fit for you the application process is the first step. This is where you give the lender your basic information, name, address, social security number, address, employment and income information, assets, etc. Once this is done and you give them permission to pull your credit, the lender can then determine if they can give you a Pre-Qualification Letter. This could get you in the door to getting your offer accepted but a smart seller will more than likely ask for a bit more.
This would be a full Pre - Approval Letter. A Pre-Approval Letter will have the initial application, credit score, and information but it will also have been verified by documentation. This will include bank statements, paystubs/W-2s/Tax Returns, employment letter, and any other supporting documents needed. Usually the only conditions beyond this point until closing on a house will be an acceptable appraisal, last minute employment verification, and no other changes that could impact underwriting.
As a seller if you are entertaining any buyer's offer you want a fully approved buyer to make sure they have the ability to purchase your home and will perform on the close date, and as a buyer you want to be fully approved before making an offer so your offer looks stronger in the eyes of the seller.