PRE-APPROVAL VS. PRE-QUALIFICATION: WHAT'S THE DIFFERENCE?

PRE-APPROVAL VS. PRE-QUALIFICATION: WHAT'S THE DIFFERENCE?

You may hear buyers say they're “pre-qualified” or “pre-approved.”

They sound similar.

They're not necessarily the same thing.

A pre-qualification is generally an initial assessment based on information provided by the borrower.

A pre-approval typically involves a more detailed review by the lender, although the exact process can vary between lenders.

Neither one should be treated as a guarantee that a mortgage will ultimately be approved.

But understanding the difference can help buyers approach the home search more intelligently.

Why does this matter?

Imagine finding the home you want and then discovering your financing isn't where you thought it was.

Getting a better understanding of your financial position before seriously shopping can help prevent surprises later.

It can also help you understand the price range you should be considering.

One important reminder:

A pre-approval isn't the same thing as having unlimited purchasing power.

Your lender can help determine what you may qualify for.

You still need to decide what fits comfortably into your life.

Know your numbers before you start making offers.

The more prepared you are before you find the house, the better prepared you'll be when the right house comes along.