Pre-qualification vs. Pre-approval: What’s the Difference?

Pre-qualification and pre-approval mean different things when it comes to getting a home loan. Both pre-qual and pre-approval begin the same way and are useful when you’re looking to buy a home. However, if you want to lock in a low-rate mortgage and be ready to make an offer as soon as you find your dream home, then it’s essential to know the difference. Read on to find out the real difference between pre-qualifying for a home loan and getting pre-approved for a home loan.

Mortgage Pre-Qualification Explained

Getting pre-qualified is the first step in the mortgage process, and it gives you a general idea of how much home you can afford. Pre-qualification is a simple process and is meant to introduce you to your buying potential and the various loan options available to you.

To pre-qualify for a mortgage, you will just need to provide us with an overall picture of your finances, including your income, assets, as well as your debts. With this information, we can give you an idea of the size of the mortgage for which you qualify.

Note that pre-qualification does not look at all your financial history, such as your credit, so the loan amount may change. If you want to know for certain how much home you can buy, then you’ll want to get pre-approved for a home loan.

Mortgage Pre-Approval Explained

Pre-approval is more involved, but it’s still easy. In addition to reviewing your income, assets, and debts, we’ll also pull your credit report. A mortgage professional will ask you for your bank statements, pay stubs.. They use this information to approve you for a specific mortgage amount, at the best rate available. When you get your pre-approval, you’ll receive the exact loan amount in writing so you can begin home shopping right away.

Did you fall in love with a home? Make an offer!

With your pre approval letter, the seller knows that they are dealing with a real offer –not one waiting for approval.

Should you pre-qualify or get pre-approval? Both pre-qualification and pre-approval begin the same way. Just answer a few questions about your financial history along with your name and contact information, and you’re on your way to getting prequalified.

The choice to pre-qual or get pre-approved is up to you. But if you are ready to buy, the prequal will not be enough. Both begin the same way, and both give you your mortgage options. However, for the most realistic look at your home buying power, as well as locking in current mortgage rates, you’ll want to get pre-approved for a home loan.

Portions reposted from The Boss