Pre-Qualification vs. Pre-Approval

Are you shopping around for a new home? Well, if you are, there are so many things you need to know and do before you can get the keys to move in.

One of the biggest things is knowing the difference between a “pre-qualification” and a “pre-approval” for your mortgage. Knowing the difference can save you a tremendous amount of stress.

A pre-qualification typically means you have spoken to a lender… that may or may not have pulled your credit report.

The lender will verbally discuss your work history, debt, payment history and assets. Actual verification of assets, payments and liability may not occur at this stage. While this is better than nothing, this qualification is not a guarantee you will get the loan.

Now, pre-approval is much different… It entails a strict review of your credit, income, down payment and asset verification. In this stage, credit reports are thoroughly dissected and underwriting software is used.

If you are serious about buying a new home, I suggest you request a true pre-approval, so you know exactly where you stand before you go new home shopping.

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