The difference between pre-approval and pre-qualification

Did you know that there's a significant difference between pre-approval and pre-qualification when it comes time to go home shopping? Sometimes understanding this distinction can make the difference between getting the home you want at the price you want it for. One gives the seller a great deal more confidence in your ability to close escrow, which is the purpose of both types of documents.

What is pre-approval for a mortgage?

You are pre-approved when you have actually applied for a mortgage, received your credit report, filled out your application, etc. Employment and income have been verified, making a seller more confident in your ability to close on the home. This is the ideal situation.

If you want the smoothest possible home-buying experience, I recommend that you spend some time getting pre-approved, rather than just pre-qualified. Please give me a call if you'd like more help on this subject.

What is pre-qualification for a mortgage?

Pre-qualification is easier to get, and therefore less meaningful when you're shopping for a home. Pre-qualification doesn't give the seller a great sense of security. You are pre-qualified for a mortgage when you get a letter from a lender saying that you are qualified to take out a mortgage loan. This is helpful, but carries less weight than a pre-approval, because the lender is simply saying that, on paper, you are qualified. It is not verified, and you have not filled out all of the necessary forms at that point to know whether you are approved.

Go for pre-approval right from the start!

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