Pre-Qual vs Pre-Approved?

Question Face

Pre-qualification and Pre-approval are terms that you will hear when you are house hunting. Yes, they do sound similar, and sometimes they are used in a similar fashion, but they are absolutely not the same.

A pre-qualification is an informal review of your qualifications. You may receive one without providing any income or asset documentation. Usually a credit report is ordered, but that is not true in all cases.

If you make an offer on a home with only a pre-qualification the offer may be rejected by an experienced agent. If your offer is accepted then there is a limited guarantee that your loan will be approved.

A pre-approval is a much more formal review of your qualifications. Proof of income, assets, and credit worthiness must be provided. The documentation is carefully reviewed and the customary mortgage debt to income ratio is calculated. More in depth questions are asked to make sure underwriting questions are addressed.

An offer with a pre-approval attached is much stronger than an offer with only a pre-qualification. The pre-approved offer has a much higher likelihood of closing in a timely fashion.

When you have a choice between a pre-qualification or a pre-approval Always Choose to be Pre-Approved!

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