The Difference Between Pre-Qualification and Pre-Approval Letters

There is a difference between getting pre-qualified for a mortgage and getting pre-approved. While they both involve financial verifications, they are very different in their approach and timeframes.


Pre-qualification is a process that allows you to get an estimate of how much home you can afford by reviewing your financial information and analyzing your credit report. It's an important first step in the home buying process and can help you make decisions about mortgage types and mortgage rates.

It's a quick and easy process, which can be done online or over the phone with your lender.

Once you've submitted your documents, the lender will run a credit check. This is typically what's called a "soft inquiry" that won't hurt your credit score.

Then, the lender may issue you a pre-qualification letter that details the tentative loan amount they're willing to offer you. It's not a guarantee and it doesn't carry as much weight as a pre-approval letter, but it can show sellers that you're serious about buying a home and are working with a lender.

A pre-approval, on the other hand, is a much more rigorous, document-based process that involves verifying your employment and financial information. This can be a valuable tool in today's real estate market, as many sellers are receiving competing offers and prefer the buyer who has been approved for a mortgage. It's a more definitive statement of commitment to buying a home and can give you an edge over non-approved buyers who are also interested in the same home.

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