Mortgage Pre-Qualification vs. Pre-Approval

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Mortgage Pre-Qualification vs. Pre-Approval: What's the Difference?


So take notice, potential home buyers. While pre-qualification can be helpful in determining how much a lender is willing to give you, a pre-approval letter will make a stronger impression on sellers and let them know you have the cash to back up an offer.


Pre-Qualification - is a guide to find out what loan price you can qualify.

Pre-qualification means that a lender has evaluated your creditworthiness and has decided that you probably will be eligible for a loan up to a certain amount.

But here’s the rub: Most often, the pre-qualification letter is an approximation—not a promise—based solely on the information you give the lender and its evaluation of your financial prospects.


A pre-qualification is merely a financial snapshot that gives you an idea of the mortgage you might qualify for.  (not to be used to buy a home)



Pre- Approval - is your pre approved for the loan, just need to submit a property and have an underwriter approve all documentation.

A pre-approval letter is the real deal, a statement from a lender that you qualify for a specific mortgage amount based on an underwriter’s review of all of your financial information: credit report, pay stubs, bank statement, salary, assets, and obligations.

Pre-approval should mean your loan is contingent only on the appraisal of the home you choose, providing that nothing changes in your financial picture before closing.



When buying a home, cash is king, but most folks don't have hundreds of thousands of dollars lying in the bank. Of course, that's why obtaining a mortgage is such a crucial part of the process. And securing mortgage pre-qualification and pre-approval are important steps, assuring lenders that you'll be able to afford payments.
However, pre-qualification and pre-approval are vastly different. How different? Some mortgage professionals believe one is virtually useless.




Why is mortgage pre-approval better?


This makes you as close to a cash buyer as you can be and gives you a huge advantage in a competitive market

In fact, pre-approval letters paired with clean contracts without tons of contingencies have won bidding wars against all-cash offers, 

The reliability and simplicity of your offer stand out over other offers, And a pre-approval can give you that reliability edge.


Any questions...

just ask!!