Pre-qualify or Pre-Approve...  What is the difference? Sometimes when talking to banks, lenders and loan officers it can get confusing because of all the mortgage jargon. Many people don't understand that there is a significant difference between getting a pre-qualification for a mortgage and getting pre-approved for one.

It's very important to note that the mortgage pre-approval process consists of sending an application into a bank or lender and getting a "mortgage pre-approval certificate" back. Pre-approvals are used for the purpose of getting a low interest rate. They are also referred to rate-holds, because the pre-approval letter guarantees that the interest rate won't change for a specified length of time.

Mortgage loan pre-approvals DON'T guarantee a final approval.

Most people don't realize that a pre-approval for a home loan doesn't guarantee that you will get approved. When a certificate is issued it will give you conditions of the pre-approval (ie. income, job verification, down payment, etc.). Basically, all the bank is telling you is "based on the information we have, we will probably approve you and we will guarantee a rate of x.xx% if we do".

So what does pre-qualify for a mortgage mean anyway?

When someone gets pre-qualified it means - based on the income, debts and so on the numbers work and you should qualify.