What is Pre-Qualification vs. Pre-Approval?
Pre-qualification is an informal estimate of how much a buyer might borrow based on self-reported information, while pre-approval is stronger because the lender actually verifies income, assets, and credit and issues a letter. Sellers take pre-approved buyers more seriously because the financing has been vetted.
Example: A buyer gets pre-qualified online in minutes for a rough number, then submits pay stubs and bank statements to get a pre-approval letter to attach to offers.