What’s the Difference Between Pre-Approval vs Pre-Qualification?

What’s the Difference Between Pre-Approval vs Pre-Qualification?

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    Published 01/04/2019 16:04 EST
    Updated 17/07/2020 09:07 EST

    If you are one of the 75% of Canadians who search online for a mortgage, you may have heard of pre-approvals and pre-qualifications. But what do these mean? Here is our best attempt at demystifying them for you. 🤯

    The Mindset 

    Pre-Approval 

    I am ready to move forward with the purchase of my house

    You are seriously thinking about buying and you want to look credible to the seller.

    Pre-Qualification

    I’m beginning the buying process

    You’re starting to get interested in buying a property and you want to get a rough idea of how much you can afford (in a short time frame).

    Evaluate how much I can borrow

    Pre-Approval 

    Specific Amount

    It relies on the same proof and documents required for the final application.

    Pre-Qualification 

    Approximate Amount

    It relies on the (unverified) information you have provided to us.

    Effort required

    Pre-Approval 

    Medium

    You will need to answer several questions. You will also have a list of documents to provide us. The good news? These are the exact documents that will be required during the final application, why not start now?

    Pre-Qualification 

    Low

    You can complete the entire process online in less than 5 minutes (start here).  

    Impacts on Credit Score

    Pre-Approval 

    Yes

    We conduct a credit check by searching for your full credit file with Equifax. 

    Pre-Qualification 

    No

    Most brokers will not consider credit. nesto does a soft pull with TransUnion that does not affect your credit score 🙂.

    Risk of Error

    Pre-Approval 

    Very low

    Since your information is validated by your documents, the risk of error is low. Curious? Here’s 8 things to avoid when buying a house

    Pre-Qualification 

    Moderate

    Since the pre-qualification does not rely on client-provided documents, there is always a risk that the loan amount may be inaccurate or the client may not qualify under the lender’s rules. (For example, we discover later on that you are under-probation at your new job).

    Does it mean I have to work with nesto?

    No. We believe that all of our clients deserve the best rates, and should have the opportunity to compare offers from different brokers / lenders.

    That’s why we do not sign an exclusive contract with our customers. We’re 100% free, no commitment, cost or obligation. 🌈

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