Loan Pre-Qualification vs. Loan Pre-Approval

Question: What is the difference between pre-qualification and pre-approval for a loan? Is one better than the other?

Answer:When pre-qualifying a borrower, a lender informally determines the maximum amount an individual is eligible to borrow. In the pre-approval process, the lender commits to lend a certain sum to a potential borrower. Commitment remains as long as the borrower still meets the qualification requirements at the time of purchase. This is a stronger position, and you should always seek pre-approval rather than pre-qualification.

-G. Zawislak