Prequalified and preapproved are two terms commonly used in the context of mortgage loans or credit applications. Here's the difference between the two:Prequalified:Prequalification is an initial
Prequalified and Preapproved. What's the difference?
Dated: May 30 2023
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Prequalified and preapproved are two terms commonly used in the context of mortgage loans or credit applications. Here's the difference between the two:
Prequalified:
Prequalification is an initial assessment done by a lender based on information provided by the borrower. It is a preliminary step to determine if the borrower meets the basic criteria for obtaining a loan or credit. The process typically involves the borrower providing information about their income, debts, and assets. The lender then evaluates this information and provides an estimate of the loan amount the borrower may be eligible for. Prequalification does not involve a thorough analysis of the borrower's credit history or verification of the information provided. It is generally a quick and informal process.
In summary, prequalification is a preliminary assessment based on self-reported information, providing an estimate of the loan amount, while preapproval involves a thorough evaluation and verification of the borrower's financial details, providing a stronger indication of loan eligibility. Preapproval holds more weight and is often seen as a more reliable indication of a borrower's ability to obtain credit.
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