The Difference Between Pre-approved and Pre-qualified
Although it may seem like they mean the same thing, at Security Financial Bank (SFB) there are important differences between pre-qualification and pre-approval when it comes to home loans.
Pre-qualification is the most common. A pre-qualification is when the applicant provides information regarding their income, assets, and a down payment amount. At SFB, our pre-qualifications are quick and reliable. We pull a credit report and utilize an automated underwriting system to help determine a loan program and a loan amount that fits the budget. A pre-qualification is an estimate of how much can be borrowed. It is important to note that it is not a commitment from the bank until all the information has been documented and verified.
A pre-approval is more precise. We begin the pre-approval process by collecting financial documents, including recent paycheck stubs and W-2 forms, from the applicant. After a comprehensive analysis of the creditworthiness of the applicant, the underwriter issues a written commitment to the applicant valid for a designated period to extend a home purchase loan up to a specified amount.