Rental4Income

  • Home
  • Investor Profile
    • Pre-Approval Form
  • Articles
    • Cash Flow
    • Finance
    • Investment Tips
    • Real Estate Investing
      • Tampa, FL
    • Real Estate Mentor
    • Rental Property
    • Tampa Real Estate News
    • Turnkey Investment Properties
    • Wholesale Real Estate
  • Videos
  • Glossary
  • Properties
  • Testimonials
  • About
    • Investing in Rental Property
  • Contact

August 2, 2022 By Admin

What is the Difference Between Pre-Qualified and Pre-Approved for a Mortgage?

The Difference between Pre-Qualified and Pre-Approved

As you prepare to purchase a new home, you’ll hear the terms “pre-qualified” and “pre-approved.” These are key steps in the mortgage application process. However, there are important differences in the two terms that every homebuyer needs to understand.

Briefly, being pre-qualified is a first step in the mortgage process that gives you an idea of how large a loan you may be qualified to receive from a lender. Pre-approved is a conditional commitment from a lender to grant you a mortgage for a pre-determined amount of money. However, neither being pre-qualified nor a pre-approval letter is a guarantee that a lender will actually grant you a loan.

Let’s take a closer look at the similarities and differences between the two terms.

Similarities of Pre-Qualified and Pre-Approved

Mortgage pre-qualification and pre-approval have many similarities when purchasing a home:

  • Both provide an estimate of the loan amount for which you most likely will qualify.
  • Both indicate to sellers that you’re a serious contender when submitting an offer for a home you want to buy.
  • Both help demonstrate that you have a good chance of closing on a mortgage.
  • Both will help your offer stand out to sellers who do not require a pre-qualification or pre-approval letter.

It is important to know that you are not obligated to obtain a mortgage from the lender who pre-qualifies or pre-approves you.

Differences Between Pre-Qualified and Pre-Approved

According to the Consumer Finance Protection Bureau, there is often not much difference between pre-qualification and pre-approval. Some lenders use the terms interchangeably, and some lenders might have different definitions for each. But, in general, here’s how the two may differ.

  • Pre-qualification is often seen as the first step in the mortgage process, followed by pre-approval.
  • For pre-qualification, you supply an overview of your financial history to the lender, including income, assets, debts, and credit score. You are not always required to document your financial history. Pre-approval is similar but typically requires that you provide documentation verifying your income, assets, and debts.
  • Pre-approval often requires a credit check, resulting in a hard inquiry on your credit report.

What Does it Mean to be Pre-Qualified?

Being pre-qualified implies a lender has decided you will most likely be approved for a loan up to a certain amount based on your current financial situation. However, pre-qualification does not guarantee you will be approved for that amount. The benefits of pre-qualification include:

  • There is no impact on your credit score.
  • There are typically no fees.
  • It helps you estimate how much home you can afford.

Although pre-qualification is a good first step, some sellers won’t take you seriously until you’ve been pre-approved.

What Does it Mean to be Pre-Approved?

Being pre-approved means a lender has actually approved you for a specific loan amount. The benefits of pre-approval include:

  • There are typically no fees.
  • You now have negotiation power with a seller.
  • It helps you know exactly how much home you can afford.
  • It speeds up the closing process.

Also, being pre-approved is a good way to spot and correct any potential credit issues.

Pre-approval does not guarantee that you will receive a home loan. Once you have a contract on a home, you must complete the process to finalize qualifying for a mortgage with the exact home you wish to purchase.

Closing Points

Pre-qualified and pre-approved are important in showing a seller that you are a serious buyer. Since the terms “mortgage pre-qualification” and “mortgage pre-approval” are often used interchangeably by lenders, dive into the details with your lender to see exactly what is meant by the terms.

 

© 2022 xpertRealtyMarketing. Sign up to have real estate articles delivered to your website.

Tweet
PinIt

Filed Under: Finance

headshot of Jorge VazquezLearn More About Real Estate Investing

The Graystone Newsletter will keep you informed with important information relating to real estate investing. The newsletter includes information we share with our clients about the best places to invest in real estate, the latest trends, and the information you need to know to succeed investing in real estate.

Real estate investors, wholesalers, flippers, real estate agents, and everyone connected to the real estate industry will benefit from the wealth of information we share very month.

For more information about how we process your data, please click here to read our Privacy Policy.

Disclaimer:
RENTAL4INCOME.COM IS A WEBSITE OF GRAYSTONE INVESTMENT GROUP LLC. YOU ARE HEREBY NOTIFIED THAT NEITHER GRAYSTONE INVESTMENT GROUP LLC, NOR ANY OF ITS EMPLOYEES OR SUBSIDIARIES, REPRESENT YOU IN ANY CAPACITY. YOU SHOULD NOT ASSUME THAT GRAYSTONE INVESTMENT GROUP LLC OR ANY OF ITS EMPLOYEES OR SUBSIDIARIES IS A REAL ESTATE BROKERAGE. WE ARE A WHOLESALER, AND ALWAYS ACT AS A SELLER OR ASSIGNOR ON EVERY TRANSACTION.

Want To Learn More About Real Estate Investing?

Sign up for our newsletter, and you'll receive our newest articles!

By clicking this button, you consent to receive emails, calls, and text messages about our products and services at the email address and phone number you provided. You agree that such calls may be made using an automatic telephone dialing system, they may be considered telemarketing or advertising under applicable law, and that you are not required to provide your consent to these calls to make a purchase from us. For more information about how we process your data, please click here to read our Privacy Policy.

Recent Articles

  • What Does a Realtor Do for the Homebuyer?
  • What Does a Realtor Do for the Home Seller?
  • What is a Mortgage?
  • Pros and Cons of Paying Off a Mortgage Early
  • How Do Interest Rates Affect the Housing Market?

Get Started Right Now!

Get started investing in real estate with Graystone Investment Group.

For more information about how we process your data, please click here to read our Privacy Policy.

phone Graystone Investment GroupCall (813) 449-4323
Text Graystone Investment GroupSend Text to (813) 600-1658
Graystone Investment Group
3001 N Rocky Point Dr E, Suite 200
Tampa, FL 33607 USA
phone Graystone Investment GroupCall (813) 449-4323
Subsidiary Brands:
Graystone Acquisitions
Graystone Real Estate
Homes4Income.com
Rental4Income.com
RealEstate4Investing.com
Accessibility
Terms of Service
Privacy Policy

Recents Posts

  • What Does a Realtor Do for the Homebuyer?
  • What Does a Realtor Do for the Home Seller?
  • What is a Mortgage?
  • Pros and Cons of Paying Off a Mortgage Early
  • How Do Interest Rates Affect the Housing Market?
  • How Long Does It Take to Buy a House?

Categories

  • Articles
  • Cash Flow
  • Finance
  • Investment Tips
  • Market Reports
  • Real Estate Investing
  • Real Estate Market Stats
  • Real Estate Mentor
  • Recent Properties
  • Rental Property
  • Special Events
  • Tampa Real Estate News
  • Tampa, FL
  • Testimonials
  • Turnkey Investment Properties
  • Uncategorized
  • Wholesale Real Estate
Client Evaluation | Investor Profile | Rewards Program | Recent Properties | Pre-Approval Form
Legal Notice | Terms of Service | Privacy Policy
© 2023 GRAYSTONE INVESTMENT GROUP, ALL RIGHTS RESERVED. THE RENTAL4Income LOGO AND BRAND IS THE PROPERTY OF GRAYSTONE INVESTMENT GROUP LLC
DISCLAIMER: RENTAL4INCOME.COM IS A WEBSITE OF GRAYSTONE INVESTMENT GROUP LLC. YOU ARE HEREBY NOTIFIED THAT NEITHER GRAYSTONE INVESTMENT GROUP LLC, NOR ANY OF ITS EMPLOYEES OR SUBSIDIARIES, REPRESENT YOU IN ANY CAPACITY. YOU SHOULD NOT ASSUME THAT GRAYSTONE INVESTMENT GROUP LLC OR ANY OF ITS EMPLOYEES OR SUBSIDIARIES IS A REAL ESTATE BROKERAGE. WE ARE A WHOLESALER, AND ALWAYS ACT AS A SELLER OR ASSIGNOR ON EVERY TRANSACTION.
Internet Marketing by Image Building Media.