You may have heard people use the terms pre-qualify and pre-approved interchangeably, but while they are in the same vain, they are different.

Prequalified
A lender, who, after answering some financial questions, determines the dollar value of a loan you can be approved for and normally issues a pre-qualification. It allows a pontial buyer to know how much they can afford and helps the buyer to focus on finding property within budget. It is important to keep in mind that a pre-qualification is neither a formal loan approval nor a commitment to lend.
After we determins that you pre-qualify, we will then issues you a pre-qualification letter. This pre-qualification letter is used when you are making an offer on a property. The pre-qualification letter indicates to the seller that you are qualified to purchase the house you are making an offer on. Click here for online Pre-Qualification

Preapproved
Pre-approval is a step above pre-qualification because the lender is committing in writing to fund the loan*, pending that their contingencies are met (ex: appraisal, pest inspection, etc). Pre-approval involves verifying your credit, down payment, employment history, etc. Your loan application is submitted to an underwriter and a decision is made regarding your loan application. If your loan is pre-approved, you are then issued a pre-approval certificate. Click here to get Pre-Approved online

Do I need to be either pre-qualified or pre-approved?
While there is no law that states you must be pre-qualified or pre-approved, it is highly recommend that you have at least your pre-qualification letter ready when you are on the market to purchase property. In many active markets such as California, having a pre-qualified letter is standard, if not the norm. Some of the key advantages include:

• Knowing how much property you can actually afford
• Puts you in a more favorable position in a multiple offer situation (i.e. the seller has other offers besides yours)
• In a multiple offer situation, some sellers will not consider any offers from someone who has not been at least pre-qualified
• Can help you negotiate a better price with the seller

In the case of pre-approval, you can close quickly because your loan has already been approved.

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