Pre-approvals and pre-qualifications are not the same thing. Here’s an explanation of how they differ.
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One of the most common questions we hear is “What’s the difference between a pre-qualified loan and a pre-approved loan?” We’re going to answer that today.
Being pre-qualified means that a lender has pulled your credit, looked at it, and validated that your score is good enough to proceed with the loan. It also means that the lender has looked at some basic income documents and determined that those look good enough to qualify you for a loan.
A pre-qualification is good, but a pre-approval is even better.
As a real estate agent, it’s important for us to at least have a piece of paper that says you’re pre-qualified for a loan. Then when we make an offer on a home, the seller can see that you’ve been vetted by a lender and that you have the capability of getting a mortgage. It’s a basic background check for prospective homeowners.
A pre-qualification is good, but a pre-approval is even better. It means that you have actually been through underwriting, the lender has looked at all of the details in your financial documents, and they have fully approved a loan for you.
If you have any questions about this topic or about anything else related to real estate, don’t hesitate to give me a call or send me an email. I look forward to hearing from you soon.