Pre-qualification and pre-approval may sound like the same thing, but they are actually two very different things. Getting these two mixed could be a mistake you really don’t want to make. If you’re looking for a place to start in your home buying journey, knowing the difference between mortgage pre-qualification and pre-approval might be a good place to start.
Pre-qualification is one of the first steps you should take in your home buying journey. It allows you to get an estimate of what you could borrow from a lender and can be done quickly, but without verified information, like a credit report, it may not be worth the paper it’s printed on. Because this is only an estimate and not an offer, it is best to be prepared if your approval amount, loan program, or interest rate changes as the lender gathers more information.
Pre-approval is much more accurate than a pre-qualification; it is an offer (but not a commitment) to lend a specific amount and is good for 90 days. You complete a mortgage application and lenders verify your creditworthiness to arrive at this amount. Having a pre-approval shows sellers that you are serious about buying a home and will have no trouble getting a mortgage.
If you are still unsure which option is right for you, it is always best to be prepared. In this competitive market, a pre-approval can be valuable when you are ready to make an offer on a house.
|Benefits||You know how much you might be able to borrow before you start shopping for your new home||Gain a competitive advantage by having your finances and creditworthiness verified|
|Process||Provide basic information to a lender and quickly get a prequalification estimate||Receive a decision within at least 10 business days after submitting documentation to a lender|
|Documentation||Answer some basic questions + credit check||Provide proof of financial details + mortgage application + credit check|
If you want to get pre-approved before you start home shopping, please reach out to one of our licensed loan officers. We’ll be happy to help!
*a pre-approval is not a guarantee of approval