Question:

What is the difference between prequalification, preapproval and final loan approval?

Answer:

Prequalification, preapproval and final loan approval are different stages in the mortgage application process.

Prequalification is an unofficial stage when you supply general income and debt information about yourself to your lender so that they can calculate for you what kind of a mortgage program you can afford and is best for you. None of the information is verified at the time.

Preapproval is the next stage at which your assets, liabilities, personal and employment information will be verified and hopefully the mortgage will be approved.

Final loan approval is the last stage - at that time all necessary documentation has been gathered and presented to the lender, property appraisal is complete and all contingencies have been met.

Usually, it is advisable that you get prequalified and preapproved by a reputable mortgage company even before you go shopping for new property since in this way you and your realtor will have better idea of the value range.

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