What’s the difference between a pre-approval and a pre-qualification? You’re going to learn today!
I’m here today to answer a common question that I get with a little extra detail. The question is, “What’s the difference between a pre-qualification and a pre-approval?” The answer is an important one because one of these things could help you score the home of dreams, while the other is nothing more than a piece of paper.
A pre-qualification is usually done online or via the phone, with you providing all the information. You don’t need documentation to get a pre-qualification. However, it stops short of getting to the meat and potatoes of your home buying picture.
With a pre-approval, a lender gets all of your paperwork together, including bank statements, tax returns, and pay stubs. The lender will check your credit, too. At the end, they will have a full analysis of what you can actually afford as a homebuyer.
While a pre-qualification will just give you a ballpark idea of what you can afford, a pre-approval actually gives you that concrete number. I had a recent client who was looking for homes after getting a pre-qualification and not a pre-approval. They found a home that they thought was in their budget, but after we went back and did a full pre-approval we discovered that they could afford an even better home. I’ve also had clients who find the perfect home only to discover that they can’t afford it when a lender gives them a pre-approval that is lower than their pre-qualification.
It’s always ideal to get a full pre-approval before going out and looking at homes. I wouldn’t even bother with a pre-qualification. If you have any questions for me about this topic or anything else, give me a call or send me an email. I look forward to hearing from you soon.