Pre-qualified vs. Pre-approval: What's the difference?

Getting pre-approved or pre-qualified for a home loan is a great way to show sellers you're serious about buying a home. Before you start viewing houses for sale, it's important to understand the difference between these two first.

"Pre-qualified"

A home loan pre-qualification is something you can do yourself. It provides a fairly good indication of what homes you can qualify to purchase. However, it is only a preliminary step in obtaining a loan. None of this information is verified.

"Pre-approved"

Pre-approval demonstrates to sellers and their agents that you are serious about buying a home. Specifically it:

• Let's you know if you can afford a home
  
• Shows sellers you're serious about buying
• May expedite the home-purchasing process

With a home loan pre-approval in hand, your lender will have verified all the information you included on your application. This helps home sellers since they know that financing will not be a problem for you. (Most importantly, it can place your name to the top of the list if a house has multiple bids!)

Pre-approval though, is not the final step. Lenders will require that you specify a property before locking the rate.

How do I get pre-approved?

It only takes a few minutes to get pre-qualified and with no obligation. Then, you can simply forward the supporting documentation and get pre-approved. If you're a first-time home buyer, you may find this to be especially helpful, as it tends to expedite buying a house. Click here to Get Pre-Approved in 24 Hours Today!

Get pre-approved before you make your first offer

Your negotiating power increases substantially when your financing is pre-approved. In fact, many sellers will request their homes not be shown to buyers who are not pre-approved. And after all, why should they?