Being pre-qualified means that the borrower has spoken to a loan officer, and discussed their financial situation. The buyer has informed the loan officer regarding income, debts, assets, savings, and liabilities, however, the buyer has not completed an application or provided the loan officer with any documentation regarding their financial situation.
Based on this information, the loan officer believes the borrower will be able to secure financing up to a certain amount based on the information being provided. Final approval will depend on verifying and documenting all of the information given.
Pre-approval is a new trend in the mortgage industry that tells a seller and real estate agent that you are a serious and qualified buyer. Final approval of the loan will be subject to an appraisal of the property and verification of borrower’s information provided on the application.