What is the difference between a pre-approval and a
pre-qualification for second mortgage loans?
Pre-approval and pre-qualification are loosely used terms that describe a stage of the lending commitment. Typically a pre-approval is more detailed than pre-qualification. For pre-qualification, the loan consultant asks you a few questions and provides you with a pre-qualification letter. Pre-approval is the initial credit decision for the underwriter approval.
This step is critical before ordering the URAR appraisal and title policy. Pre-approvals are the first step for a rate lock commitment that guarantees you a specific interest rate for a specific period.