What is The Difference Between a Pre-Approval and a Pre-Qualification
The key difference between a Pre-Approval and a Pre-Qualification lies in the level of verification and reliability each provides in the mortgage process:
Pre-Qualification
What it is: A basic estimate of how much a buyer might be able to borrow.
Based on: Self-reported financial information like income, debts, and assets.
Verification: No formal review of documents; not verified by a lender.
Speed: Quick and often done online or over the phone.
Usefulness: Good for early-stage planning, but not strong enough to support an offer in a competitive market.
Pre-Approval
What it is: A conditional commitment from a lender to loan a specific amount, based on a formal review.
Based on: Verified financial documents (e.g., W-2s, pay stubs, credit reports, tax returns).
Verification: Involves a hard credit check and full documentation review.
Speed: Takes longer, often a few days.
Usefulness: Stronger than a pre-qualification; shows sellers the buyer is serious and financially capable.
Bottom line:
Pre-Qualification is like a casual conversation about borrowing power.
Pre-Approval is like getting a green light (with conditions) from a lender.
Contact Allen Deaver of Asset Realty for More Information about a Pre-Approval and a Pre-Qualification
