Pre-Qualified vs Pre-Approved - what's the difference?
Written by Paul O'Connell
Thinking of purchasing a home this spring or summer? If so, one of the first things you'll want to do is get a mortgage pre-qualification or a mortgage pre-approval. There's a significant difference between these two, and I'll explain it to you briefly. It's important as a potential home-buyer for you to understand the difference between these two, as most sellers and definitely the agents involved recognize the distinct difference.
First, a mortgage pre-qualification is an approximation, not a promise. Simply, the lender has reviewed your credit, and based on the information you have submitted, you are most likely able to get the mortgage. It's best used as a tool for you as a potential buyer to understand what your mortgage payment will be and to focus in on working with your real estate professional on what price range you should be looking for.
The second is the mortgage pre-approval. This is the real deal. This is the one that sellers and agents look for that says:
You are committed to the process and you've done the work
You've collected the necessary documentation
The lender has pulled a more thorough picture of your credit through a tri-bureau credit pull
The lender has packaged this together with your documentation and presented it to a mortgage underwriter
The underwriter has taken it through a DU (desktop underwriting) process to determine that they are willing to grant you the mortgage.
It's important to understand the difference between the two, and we have a number of really great lenders that can help you understand the process more fully. Also, we are here to answer any questions you might have.
So if you're just thinking about the process and want to get started, a pre-qualification can help. On the other hand, if you're serious about finding your new dream home, it's important for you to get that full pre-approval!
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