The Difference between being Pre-Qualified and getting Pre-Approved
There is a very important difference between being Pre-Qualified and Pre-Approved.
Pre-Qualified is a planning step where you get the mortgage broker and lender to look at your application and they will let you know what your maximum mortgage limits are. If you are not sure about what you can afford, it would be wise to see what types of mortgages you would be qualified for. It is at this stage where you discuss any shortcomings, like credit, down payment or income requirements. You may be required to take some planning steps. The process may take some time, but you really don't want to pay more than you have to for your mortgage. A poorly planned purchase can force you into taking a sub-prime mortgage, that is far worse than you expect. Even if you are pre-Qualified for your new mortgage you should always make your purchase "subject to financing", that way the bank can confirm the property falls into their lending guidelines.
A Pre-Approved mortgage means the bank is holding an interest rate for you. It does not mean you are guaranteed to get the mortgage, but they would have briefly looked at your application and decided that they would probably consider doing business with you. To take advantage of the rate they are holding, you must complete the closing of your mortgage within the time-line of the Pre-Approval.
The Lenders will always have the final say in whether or not a mortgage is finalized. One really big advantage to using a mortgage broker is when the bank you thought Pre-Approved or Pre-Qualified you fails to complete their commitment, your broker can quickly change gears and move your business to a more friendly lender (you don't have to lift a finger).
