Prequalification and preapproval are two forms of mortgage approvals that, at their most fundamental level, refer to the processes a lender takes to confirm that a client can afford a mortgage.
A pre-qualification is a quick and simple approach to determining the maximum amount you might be able to borrow for a mortgage. You can acquire your estimated price range online in a matter of minutes by providing your lender with some basic financial data, such as your projected household income and debt..
A mortgage preapproval, on the other hand, is a more formal procedure that calls for the lender to confirm your financial data and credit history. Paystubs, tax returns, and even your Social Security card may be needed as pre-approval documentation.
This means that a preapproval is a more reliable indicator of your ability to pay and lends more weight to your offer than a prequalification. This will enable you to prove to sellers that your finances have been examined and that you can afford a mortgage by providing a preapproval letter. To be sure, though, confirm with your lender.