A prequalification or pre-approval letter is usually asked for prior to shopping for houses. This means that you have applied for a mortgage and have passed the initial requirements to be considered prequalified.
Both letters refer to a lender that specifies how much the lender is willing to lend to you. The information that is on the letters of either one can be very helpful and useful. But, they are not guaranteed loan offers.
A pre-qualification or a pre-approval is really the same thing and is often seen as the first step in a mortgage process. A pre-qualification will have to include an overview of your financial history that includes your income, assets, debts, and your credit score. Then with all the information the lender has collected, he will then determine and give you an estimate of what you will qualify for.
Most lenders use both “pre-qualification” and pre-approval” interchangeably. A pre-approval will also need your financial history to determine your financial stability. The lender will need to know your financial stability to say whether you’re eligible for a loan and how much you are available for.
Most lenders will not charge you for a pre-approval. There could possibly be a credit report fee which is typically 25 dollars. A pre-approval is generally valid for at least 60 to 90 days. It can be updated by a reverification of some of the documents. You can make an offer with both a pre-qualification or a pre-approval.