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The act or process of determining the approximate amount a borrower will be able to borrow before he/she actually applies for a loan. Prequalification looks at the borrower's current income and debt to make this determination. Prequalification is most common with mortgages. Because the borrower has not applied for the loan, it is not a guarantee of approval, but is rather an estimation. See also: Pre-approval.
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Pre-QualificationSame as Qualification.
The Mortgage Encyclopedia. Copyright © 2004 by Jack Guttentag. Used with permission of The McGraw-Hill Companies, Inc.