What’s the Difference Between Pre-Qualified and Pre-Approved for a Mortgage?

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 HomeIt’s full of tips and advice to help you find and buy the home of your dreams.

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