pre-approved or pre-qualified, which is better

Are you pre-qualified or pre-approved for a loan? What's Better?

Confused about what getting pre-qualified or pre-approved means? You're not the only one. There's a big difference between a mortgage pre-qualification, a pre-approval and an actual mortgage approval.

Get Pre-Approved & your loan will close as long as the property gets a satisfactory title and appraisal and your financial situation remains the same.

Gain the buying edge
The advantages of pre-qualification and pre-approval are two-fold: you're more attractive to sellers, who needn't worry that they'll accept your offer only to have your loan turned down, and you'll save time to closing when you find a home because the lender will have already completed the necessary qualifying and underwriting steps.

Before you begin to shop for a new home, you should set up a time to meet with me so we can figure out how much you can afford. This will put you in a better position as a buyer. That’s when it is important to understand the distinction between being pre-qualified for a loan and pre-approved for a loan. The difference between the two terms will be crucial when you decide to make an offer on a house.

To get pre-qualified for a loan, I will collect information about your debt, income, and assets. We’ll look at your credit profile and assess goals for a down payment and get an idea of different loan programs that would work for you. I will issue you a pre-qualification letter indicating the amount you are pre-qualified to borrow.

It is important to understand that a pre-qualification letter is just an estimate of what you are eligible to borrow, not a commitment to lend. Getting pre-approved for a loan gives you competitive advantage when the time comes to bid on a home because you have been approved for a loan for a specified amount.

To get pre-approved, you will complete a mortgage application and provide me with various information verifying your employment, assets and financial status such as W-2 forms, bank records and credit card statements. We’ll review your mortgage options and submit your application to the lender that best meets your needs. Once the application process is complete you will receive a pre-approval letter indicating the amount your lender is willing to lend you for your home.

A pre-approval letter is not binding on the lender; it is subject to an appraisal of the home you wish to purchase and certain other conditions. Important note: Should your financial circumstances change before closing, make sure to contact your lender, as your pre-qualification or pre-approval status may no longer be valid.