First let’s clarify a few terms that borrowers often use interchangeably although they are different.
A mortgage pre-qualification is designed to give you an idea of how much money you can borrow or how much a loan will cost you. It is not a guarantee and there is no commitment from the lender to loan the money. A pre-qualification simply means that upon reviewing the financial information provided, the lender believes you will qualify for a loan. You typically do not have to fill out a full mortgage application (1003) or undergo a hard credit check in order to obtain a pre-qualification.
A mortgage pre-approval, or letter of pre-approval, goes further. It is a lender’s conditional commitment to lend you a specified amount of money. A pre-approval letter is a powerful tool to have on hand for house hunting, allowing you to shop with confidence and show sellers that you are a serious buyer. Your provider will likely have you fill out a mortgage application (1003), or fill in sections of the application, in order to obtain a pre-approval.
To obtain either a pre-qualification or a pre-approval, contact a lender or mortgage broker and explain your needs and where you are in the process. They’ll ask for some financial information, such as income, assets, debts, and credit history along with how much money you plan to borrow.