Pre-Qualified vs. Pre-Approved: What’s the Difference?
The things you need to have handy for this process is:
-Your two most recent paystubs
-2 years of W-2's and tax returns
-A month's worth of bank statements
Pre-qualifications are based on data you submit to a lender, which will provide a ballpark estimate of how much you can borrow. Your pre-qualified amount isn’t a sure thing, because it’s based only on the information you’ve provided. The lender won’t take a close look at your financial situation and history to determine how much mortgage you can reasonably afford until you reach the preapproval stage. You’ll receive a conditional commitment in writing for an exact loan amount after you’ve been preapproved.
Pre-approvals are more concrete. You must complete an official mortgage application to be preapproved, and you must supply the lender with all the necessary documentation to perform an extensive check on your financial background and current credit rating. The lender can preapprove you for a mortgage up to a specified amount after reviewing your finances. You’ll also have a better idea of the interest rate you’ll be charged on the loan at this point, because this is often based in part on your credit score, and you might even be able to lock in an interest rate.