 TITLE: What Is a Preapproval Letter? CONTENT: Difference Between Preapproval and Prequalification\n---------------------------------------------------\nAlthough the terms are sometimes used interchangeably by lenders, there are key differences between a mortgage prequalification and a mortgage preapproval.\nA prequalification indicates the lender has reviewed your credit profile and financial information to determine your approval odds. Lenders may use information you provide, or they may access your credit data through a soft inquiry that won't impact your credit score. You will typically need to provide your annual income, housing payment, monthly debt obligations and savings account balance for the lender to review.\nGetting prequalified helps you compare your options, but it's still only the first step in the typically lengthy mortgage process. The lenders will need to analyze your finances much more closely before they'll officially approve you for a loan. If you're having trouble getting prequalified, you can speak with a loan officer to see if there are ways to reverse their decision or you might take it as a sign to move on to another lender.\nThe mortgage preapproval process entails a detailed review of your finances and could take some time. The process is essentially the same as what you'd have to do when officially applying for a mortgage. You will be required to submit financial documentation to the lender for review. Also, expect a hard inquiry on your credit report, which could impact your credit scores (though it shouldn't have much of an impact, if it has any at all).\nHaving a mortgage preapproval in hand is beneficial when home shopping as it may give you a competitive advantage over other buyers. It is not a guarantee your loan application will be approved, but preapproval at least shows the seller you mean business and are likely to secure the financing needed to seal the deal. Furthermore, some sellers require a prequalification or preapproval letter before they will consider or accept your offer. END