Pre-Qualification vs. Pre-Approval

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Pre-Qualification vs. Pre-Approval.  What’s the Difference?

There are plenty of real estate terms used when buying or selling a home and it can be confusing when trying to navigate the process.  Both buyers and sellers find terms like “Pre-Qualification” and “Pre-Approval” used interchangeably, it’s no wonder they find themselves wondering how to proceed.


The first step in obtaining a home loan is to meet with a reputable lender and discussing their financial situation. The lender will discuss income, job stability, debt and credit. Once they have performed a basic review of the qualifications and check credit, they will issue a Pre-Qualification Letter to the potential buyer. This letter will identify the maximum sales price, down payment requirement and basic terms of the loan, such as interest rate. The Pre-Qualification letter is used to provide evidence that the buyer has been reviewed by a lender who is vouching for their ability to obtain a loan.


A Pre-Approval is very different.  A pre-approval is signifies that a loan application has been taken thorough a rigorous procedure.  The lender collects all the necessary information and proof of eligibility (income, credit and asset information) and has it reviewed by the lender underwriter for approval. A Pre-Approval letter is almost like shopping with cash, the only remaining piece of the puzzle is the property they are buying.

A Few Benefits of Pre-Approval

·        A Pre-Approval saves time spent looking at houses you can't afford.

·        All home sellers will require a Pre-Qualification or Pre-Approval letter with an offer.  A Pre-Approval letter gives you an edge when multiple offers have been made on a house.

·        Pre-Approved buyers can generally close more quickly, since most of the work has already been done.


The home loan process might feel overwhelming and difficult to understand.  I have experience in the mortgage industry and many trusted resources that can help make the process easier to understand and navigate.