What is the difference between pre-qualified and pre-approved?
A pre-qualification is an estimate from information you provided verbally. A pre-approval is an underwritten review of your documents that holds a rate. Neither is a commitment to fund the house you eventually buy.
Pre-qualification takes minutes and is worth roughly that. Nobody has verified anything.
Pre-approval means an underwriter reviewed your income documents, pulled your credit and confirmed your down payment, and the lender issued a letter with an amount, a rate and an expiry. It is credible to a seller and it protects you against rate increases while it lasts.
The distinction that costs people money is a third one. Even a full pre-approval is about you, not about the property. The lender has not appraised the house, and they can decline the deal on the property: a low appraisal, a very small unit, a co-op, a known structural issue, a rural well and septic. That is precisely why a financing condition exists, and why a pre-approval is not a reason to waive it.
Next questions
What happens if my financing falls through after I have an accepted offer?
If you kept a financing condition and it fails within the deadline, you walk away and your deposit is returned. If you waived it, you must close anyway or breach the agreement, losing the deposit and exposing yourself to a claim for the seller's loss.
Ontario
How long does a rate hold last?
Usually 90 to 120 days from approval. If rates fall during the hold you get the lower rate; if they rise you keep the held one.
Market practice