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Mortgages: Pre-Qualified vs Pre-Approved

Many people ask us “what’s the difference between getting pre-qualified for a mortgage vs getting pre-approved?” There are some subtle, but important differences.

A pre-qualification is basically when a mortgage lender takes a cursory look at your credit and income and gives you an opinion on what you should be able to qualify for in terms of a loan. A pre-qualification is NOT a commitment, it’s a considered opinion.

A pre-approval, on the other hand, is a conditional approval for a mortgage. This is a more involved process. First, a lender will do a hard pull on your credit report. You provide information like copies of your tax returns/W-2’s/1099’s etc. In this process, the mortgage lender will go through the process and issue you a conditional approval for a mortgage at a specific amount.

To sellers, this is an important difference. In many cases, sellers won’t consider offers unless the buyer can show proof of funds – either cash or a pre-approval from a lender.

Pre-approvals are generally valid for 90-180 days after they’re issued. They are considered ‘conditional approvals’, because if something significant changes on your credit report between the time you get pre-approved and the time you make an offer on a home, the amount could change – or the approval could be rescinded.

When you’re seriously considering purchasing a home, it’s highly recommended that you have a pre-approval in place. If you need recommendations for a mortgage broker to assist you in getting a pre-approval, please reach out to our team and we can assist.

Pete Werner

I'm an Orlando local and owner of The DIS (wdwinfo.com), DVCfan.com, DCLfan.com, and host of the DIS Unplugged podcast.

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