What is the Difference Between Pre-Qualifying and Pre-Approval?

A pre-qualification is normally issued by a loan officer, who determines the dollar value of a loan you can be approved for, based on review of your credit report and presented employment, income and assets documentation.
However, loan officers do not make the final approval, so a pre-qualification is not a commitment to lend. After the loan officer determines that you are pre-qualified, he/she then issues you a pre-qualification letter. This pre-qualification letter is used when you are making an offer on a property. The pre-qualification letter indicates to the seller that you are qualified to purchase the house you are making an offer on. It is very important to get this letter before you start looking for a property. You should know your options on today’s market. It will save your time. 

 Pre-approval is a step above pre-qualification. Pre-approval involves verifying by a lender your credit, down payment, employment history, etc. Your loan application is submitted to an underwriter and a decision is made regarding your loan application. If your loan is pre-approved, you are then issued a pre-approval letter.