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Pre-Qualified vs. Pre-Approved

A pre-qualification letter for a loan is a review of the borrower’s information for an application for loan. The  borrower provides income, asset, and liability information.
This information is not verified. Pre-qualification provides  the borrower with information to begin the home purchase process.

A loan pre-approval is where the borrower’s income, assets, and liabilities have been verified through a loan  application, a credit report, and an automated underwriting system. The underwriting system assigns a level of risk  to the borrower. This is a solid indicator on how an actual underwriter will view a loan once submitted for approval. Once the process is complete a pre-approval letter can be written. Pre-approval letters are nice to have when making an offer to purchase. Final loan approval is necessary to complete a purchase.






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