If you’re doing research about buying a home, you’ll see the terms “pre-approval” and “pre-qualification” seemingly everywhere. Although they sound similar, these are actually two different things! Here’s how you can tell which is which.
What Does Pre-Qualified Mean?
- A quick “snapshot” that helps you know how much mortgage money you might qualify for.
- May require a credit check, depending on your state.
- Does not require documentation of your financial situation.
- Provided by a lender as a ballpark estimate.
- No cost involved and no commitment on either side.
- A good way to start figuring out how much home you can afford.
- Does not work as a signal that you are ready to purchase a home.
What Does Pre-Approved Mean?
- Always requires a credit check.
- Verified financial history, including documentation.
- Should you choose to, you can get a mortgage for the amount and terms for which you are pre-approved.
- No commitment to receive a mortgage from the pre-approving company.
- A sign that you are very serious and ready to purchase a home.
Learn More About Buying a Home
Are you interested in buying a home in 2020 or beyond? Learn more about how the home buying process works with our free ebook, The Essential Guide to Buying a Home. It’s full of tips and advice to help you find and buy the home of your dreams.