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Pre-Qualification vs Pre-Approval


Two often confused terms in the home buying process are a mortgage loan Pre-Qualification and a home loan Pre-Approval. Even some Loan Originators and Realtors will use the terms incorrectly, so here’s what you really need to know about each one.



A mortgage loan pre-qualification is simply an estimate of how much house you can afford and how much money a lender would be willing to loan you. The best time to get a pre-qualification is right at the beginning of your home buying process, before you even start looking at houses. This involves either sitting down with one of our loan consultants or talking with one of them on the phone and providing information on your income, assets, debts and a potential down payment amount. The loan consultant would then provide you with a ballpark figure in writing of how much you could afford to pay for a monthly mortgage. There is no cost involved and there is no commitment on either side. This estimate simply helps you figure out if buying a home is a viable option, and if so, what your price range would probably be.



Getting pre-approved means that you have a tentative commitment from a specific lender for mortgage funding. In this case, you provide us with actual documentation of your income, assets and debts. This process will require us to run a credit check and work to verify all your employment and financial information. Once you are approved, we will give you a Pre-Approval letter, stating how much money a lender will be willing to loan you for a home purchase. With a Pre-Approval in hand you can start your shopping. Real estate agents and sellers will take you much more seriously when they see you have your mortgage funding in place.  Some even require it to even begin showing you properties.

It is important to understand, however, that even a Pre-Approval is not a guarantee that you will be approved for a mortgage loan. The funding will only be given when the property appraisal, title search and other verifications check out on the home you have chosen to buy. And, a Pre-Approval is not binding. You can still obtain a mortgage from a different lender. If you do stick with the same company that Pre-Approved you though, the application process will be much shorter once you find the right house.  


Click here to start the Pre-Approval Process 


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