Mortgage Pre-Qualification vs. Pre-Approval: What You Need To Know

May 28, 2024 Buying A Home

Thinking of purchasing a home? Understand the difference between pre-qualifications and pre-approvals.

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Buying a home can be confusing – especially if you’re not familiar with industry terms and applications. One topic that’s often difficult to understand is the difference between a mortgage pre-qualification and pre-approval.

See how they differ and learn how you can benefit from both.

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Mortgage Pre-Qualification

Early in your homebuying journey, you can get a mortgage pre-qualification. Based on the information supplied on your loan application, a lender provides a close approximation of what you’ll qualify for if you were to submit a formal application that undergoes a more in-depth review.

At A+FCU, we pull a credit report and base your pre-qualification on the information that appears on the report along with information provided on the application, but every lender is different.

Pre-qualifications can be beneficial if you’re planning on buying a house in the future and want to look at how lenders view your financial history. It can also help you start shopping around for a house and give you a good idea of what you can afford and thus what to look for.

Mortgage Pre-Approval

As you prepare to make an offer on a home, you’ll want to obtain a mortgage pre-approval. This requires verification of your income, assets, and debts, as well as a credit report. Once authorized, your loan pre-approval is good for 30-90 days, depending on the lender.

A pre-approval can be critical and give you a competitive edge when making an offer on a house – this shows you have secured financing and will have the necessary funds to move forward with the purchase.

Which One Do I Need?

Both can be beneficial depending on where you are in your homebuying journey, but ultimately, a mortgage pre-approval will help you most when placing an offer on a home. While a pre-qualification tells you how much a lender is willing to loan you, a pre-approval backs your offer up and lets the seller know you’re a serious buyer.

Next Steps

To receive a pre-qualification or pre-approval from A+FCU, submit an online loan application. Once you submit the application, we’ll send you a pre-qualification letter and a mortgage expert will contact you to talk about your options as well as answer any questions you may have. Along with the pre-qualification letter, you’ll receive a list of required documents needed to get a pre-approval. See the applicant checklist here to get an idea.

Membership required. Programs, rates, terms, and conditions are subject to change without notice. Normal lending criteria apply. All loans subject to credit approval. Rates are subject to credit score, loan-to-value matrix adjustments, and normal credit underwriting factors. Property must be located in Texas and primary owner-occupied single family residence. NMLS #405608.

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