May 30, 2024

Pre-Approved vs. Pre-Qualified: Understanding Your Options

When it comes to getting a mortgage, it’s important to understand the difference between being pre-approved and pre-qualified. Both terms refer to the process of getting an estimate of how much you can borrow, but there are some key differences between the two.

Pre-qualification is a relatively quick and easy process. You can usually get pre-qualified over the phone or online in just a few minutes. The lender will ask you for some basic information, such as your income, debts, and assets. Based on this information, the lender will give you an estimate of how much you can borrow.

Pre-approval is a more involved process. The lender will need to verify your income and debts, and you will likely need to provide documentation, such as pay stubs and bank statements. The lender will then issue you a pre-approval letter that states how much you have been approved to borrow.

There are several advantages to getting pre-approved for a mortgage. First, it shows sellers that you are a serious buyer. Second, it can help you get a better interest rate on your loan. Third, it can speed up the closing process.

If you are planning to buy a home, it’s a good idea to get pre-approved for a mortgage. This will give you a better understanding of how much you can afford to borrow, and it will make the home buying process smoother.

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