When it comes to mortgages, the terms pre-approval and pre-qualification are often used interchangeably. The result is confusion for buyers, and some Realtors® , that can have dissapponting or even disasterous results.
Pre-qualification is an assumption that mortgage financing can be obtained through a conversation with a consumer about income, assets, & credit. Many consumers assume this is the same as pre-approval and are disappointed when they find out they can't obtain a mortgage for the amount they have been planning for while shopping fo a home.
Pre-approval is a preliminary approval based on a completed loan application & analysis of required income, asset, and credit documents, as well as any required explanation for potential financing hurdles.
If your lender has not asked for financial documents to put together a pre-approval, you HAVE NOT been pre-approved and you could find yourself short of funds after making an offer.
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