These are the differences between a pre-approval and a pre-qualification.
What’s the difference between a pre-qualification and a pre-approval? Many people are often confused by these two real estate terms. To help with this, I’m explaining what the two terms are and how they’re different from each other.
Essentially, a pre-qualification letter from a lender is a quick and free, no-obligation conversation. It usually takes less than 10 minutes and involves discussing assets, liabilities, and potential income. However, it's essential to note that this is just the beginning phase of the conversation. When submitting an offer, it's not advisable to include only a pre-qualification letter, as it doesn't hold much weight. Instead, buyers should provide a pre-approval letter as well.
A pre-approval letter, which is obtained from a lender or mortgage company too, is also a free no-obligation letter. However, involves a more thorough qualification process, including checking your credit, assets, liabilities, debts, and income. Sellers feel much more comfortable working with potential buyers who have submitted a pre-approval letter.
"Sellers feel much more comfortable working with potential buyers who have submitted a pre-approval letter."
As a borrower, it's crucial to be transparent with your lender about all relevant financial details. They will ask you in-depth questions to understand what you can afford, and honesty is essential, as they will eventually verify the information provided.
If you have any questions or are looking to purchase a home soon, it's a great idea to talk with a local lender. Even if you're planning to buy six to 12 months from now, understanding the roadmap to obtaining the loan you need will be beneficial. Our team is here to assist you every step of the way, so feel free to call or email us if you need help. Get in touch with us today and secure your dream home with confidence.