Buyer Be Ready: Pre-qualification vs. Pre-Approval, What’s the Difference?

By
Real Estate Agent with Prudential PenFed Realty SP600683

In the latest installment of the “Buyer Be Ready” series, is a brief comparison of pre-qualification and pre-approval for a mortgage loan. As many may not think to ask “what’s the difference?”

 So here it is, short and sweet. And remember to consult a licensed mortgage professional for further clarification as well as once you’re ready to buy a home and finally attain a loan!

 Pre-Qualification is simply having been informed of an estimated or an approximate amount of a mortgage that you should be able to qualify for. It doesn’t commit you to anything and there is no loan amount or interest rate promised, nor is it an in-depth look at your ability to purchase a home. Simply put, there is a bit less of a guarantee that you will get a loan than if you went through the pre-approval (which will be pending while you’re in the active search for a home with an agent). It can take place over the phone or online with you supplying the basics and maybe just a bit of financial information (estimated annual income, home address, how long at residence, etc.). Usually, you can get pre-qualified at sites like Lendingtree.com, or on a bank or lender’s website. Once you’re given the details of pre-qualification, you’re not obligated to proceed with getting Pre-Approved. It is however, a good first step in seeing where you stand in this current market and hopefully a motivator to get you to purchase.

Pre-Approval, is a much more concentrated process, and the necessary first step to buying your home when you’re ready to finally make the move. Undergoing the pre-approval process involves locking in an interest rate and determines what you REALLY can afford. Once you have decided you finally want to own a home, it is best to do in person.

Patrick Hooper of Prosperity Mortgage in Washington, DC simply states:” Pre-Approval is always better. A “pre-qual” is like a car wash; a pre-approval is like a complete car detail!”

Posted by

Shantée Haynes
REALTOR®
Prudential PenFed Realty
216 7th Street SE
Washington, DC 20003
DIRECT: 202-355-5544
OFFICE: 202-393-1111

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Re-Bloggged 1 time:

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  1. Charles Stallions 11/04/2011 11:40 PM
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Topic:
Lending / Financial
Location:
District of Columbia
Groups:
1st Time Buyers
Realestateandfunding
REALTOR LIFE
The "young" Real Estate Professional
Washington, DC Mortgage and Real Estate Issues
Tags:
prequalification
preapproval
first time buyers

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Rainmaker
136,016
Jon Zolsky
your Daytona Condo Agent
FunCoast Realty 386-405-4408

Shantee - and both can mean very little as the indication of Buyer's ability to purchase when they are looking for a condo, as they may have the best income in the world, have credit score of 850, be preapproved and the Lender will not finance a condo.

November 03, 2011 10:42 AM
Rainmaker
68,559
Shantée Haynes
Your DC Resident Agent!
Prudential PenFed Realty

You're 100% correct! It's a known headache here and there unfortunately! lol

November 03, 2011 10:57 AM
Ambassador
802,956
Debbie Laity
Your Real Estate Resource for Delta County, CO
Cedaredge Land Company

I hit the suggest button. There is a difference between pre qual and pre approval. The consumer shouldn't think they are one and the same.

November 03, 2011 11:03 AM
Rainmaker
68,559
Shantée Haynes
Your DC Resident Agent!
Prudential PenFed Realty

Thanks so much Debbie! I think the simple basics are some of the best info we can give!

November 03, 2011 11:06 AM
Rainmaker
1,322,227
Charles Stallions
800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl.
Charles Stallions Real Estate Services

Could be very little difference if an experienced broker prequals but most are not so it makes all the difference in the world.

November 05, 2011 12:20 AM
Anonymous
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Rainmaker
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Shantée Haynes

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