Pre-Approval or Pre-Qualification?

Should I obtain a Pre-Approval or Pre-Qualification?

Many people start their home search by meeting with a Realtor to learn about the home buying process. A well seasoned agent will suggest you obtain a pre-approval letter before starting your home search.

So what’s the difference between a pre-approval and pre-qualification?

A pre-qualification requires NO documentation about income, tax returns, and debt. A lender will estimate your purchasing power; there is no guarantee you are qualified to purchase homes any price range.

For a lender to issue a pre-approval, they will need to verify income with pay stubs, W2’s, tax returns, and they will check your credit report. A pre-approval indicates you are qualified to purchase homes up to a certain price point.

When submitting an offer, sellers review pre-approvals to ensure the buyer is well qualified to purchase. In a competitive market, there might be no time for a lender to process your pay stubs, W2’s, tax returns, & credit report if you wait until you find your dream home.

Many sellers will not consider a pre-qualification.