Which Is Better: Pre-Qualified or Pre-Approved?
Apr 09, 2021
By Jane Herro
When it comes to the home-buying process, a key part of the equation is being ready. A common misstep that people make at the beginning of their search is not being ready with a pre-approval letter, but instead a pre-qualification.
A pre-qualification is based on non-verified information provided to the mortgage broker by the applicant and does not include a credit report inquiry. The pre-qualification letter is helpful to get an idea of what price range you should be looking in, but a pre-approval letter is necessary once you’re searching seriously and contemplating putting in offers.
A pre-approval gives future home buyers an estimate of the amount they may be able to borrow to buy a home, based on an initial review of financial information provided by the customer and credit report information. This letter will give assurance to sellers that you will likely be able to secure a mortgage based on your credit report, but it is not a guarantee you will be approved. That final approval process takes place after your offer has been accepted and the mortgage underwriters approve your loan.
Assembling your team – a buyers agent, a mortgage broker and a real estate attorney – is imperative when you’re ready to begin your search.
The market is already starting to heat up for the Spring season and having a solid team working for you will give you a leg up when you’re ready to put in an offer on your new home. We love working with first time home buyers and are always happy to answer any questions you may have about the buying process!