Pre-Qualification
From this information, the mortgage representative is able to confirm the amount and type of loan available to the borrower. The borrower receives a pre-qualification, which provides you with an understanding of your lending capabilities.

Pre-Approval
When purchasing a home, it can be advantageous to get pre-approved for a mortgage.

A pre-approval takes the prequalification process one-step further. A loan application must be completed, which is required in order to be pre-qualified. The mortgage lender will review the following information: income, debt, assets, confirmed monies available for down payment and closing costs. A credit report will be run and the lender will then issue a loan approval letter to the borrower based on their review of the information.

The 'pre-approval letter' can be provided to a Realtor and/or Seller. Typically, Realtors/Sellers prefer to work with people they know are able to obtain sufficient loan funds to purchase the property.