Pre-Approval Vs. Pre-Qualification - What’s The Difference?

Posted by Kent Redding on Wednesday, March 1st, 2017 at 4:59pm

By The Kent Redding Group

Planning On buying an Austin Texas home but you're not sure what's the difference between pre-approval vs. pre-qualification? Sadly, in today's real estate market many buyers still don't know the differences between the two, that's why in today's article we will break down the differences between pre-approval vs. pre-qualification so you will know the steps to follow for buying a home.

Pre-Qualification

What does pre-qualification mean? A Mortgage pre-qualification is basically a rough estimate of your borrowing power.

Getting pre-qualified is fairly simple, all you have to do is either call or visit a mortgage lender.

The mortgage lender won't run your credit report; they will review your finances and give you a pre-qualification letter which you can use as a benchmark for the value of the home that you're qualified to purchase.

Pre-qualification is the first step to getting a mortgage and buying a home.

Pre-Approval

Although it’s fairly easy for anyone to get pre-qualified, the reality is that getting pre-approved for a mortgage loan is a different story because a borrower's ability to get pre-approved for a mortgage loan is all based upon the following:

  •       Verification of employment
  •       Verification  of financial resources
  •       Verification of credit score
  •       Verification of down payment

Pre-approval is also contingent on the buyer’s ability to find the right property, their continued creditworthiness, and possible additional terms from the mortgage lender.

The Bottom Line

Be warned. Pre-approved and pre-qualified are not the same things. Don't assume that the bank will provide your loan until you have the former. The mistake could cost you your new home, so before you meet with the banks, do your homework by getting pre-approved. Another important way to prep for getting a mortgage is researching interest rates using a tool like a mortgage calculator.

Search for a Home in Austin Texas

To start searching for a home in Austin Texas contact the Kent Redding Group by calling us at (512) 306-1001 or click here to connect with us online.

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