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What is the difference between Qualifying and Approval?
The main difference between getting qualified and getting approved for a mortgage is that qualification is based strictly on the verbal information you give a mortgage lender and approval happens only after you provide documentation that verifies your income, debt, assets, and credit score. There's usually a fee associated with getting approved, but you can get qualified for free.
Qualification simply means that a lender has determined that you make enough money, and have a good enough income-to-debt ratio, to afford a specified monthly mortgage payment. But being qualified doesn't guarantee that you'll get a mortgage.
To get a mortgage approval, on the other hand, a lender has to verify your financial and credit information, as well as run a credit report. After that, you're approved for a maximum loan amount.
When you're house-hunting, a pre-approval is very attractive to sellers. It tells them you've already submitted to a credit check, you're already working with a specific lender, and you know "how much house" you can afford. In other words, you're not just a "tire-kicker"; you.re serious about purchasing a home.
For these reasons, we recommend that, when you decide you're seriously in the market for a new home, you get pre-approved for a mortgage. This will give you some leverage when negotiating with a seller, and will prevent you from wasting your time looking at homes that are out of your price range.