Prequalified And Pre-approved: What's the Difference?

Prequalified And Pre-approved: What's the Difference? - Absolute Mortgage Group Inc.

Prequalified And Pre-approved: What's the Difference?

If you're thinking about buying a home, then you've probably heard the terms

Prequalified And Pre-approved: What's the Difference?

What Is Pre-Approval?

Does Getting Prequalified And Pre-approved Even Matter?

The Bottom Line: Prequalified Versus Pre-approved

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If you're thinking about buying a home, then you've probably heard the terms "pre-approval" and "prequalification." While often used interchangeably, there's a slight difference between the two. This blog will go over what it means to be prequalified versus pre-approved.

Both terms refer to the initial steps taken to determine whether you're a strong applicant for a home loan and how much.

But there's a difference between prequalified and pre-approval. Prequalified essentially is an estimate of how much your mortgage can be (the same as a pre-approval), but it's nothing more than that --an estimate.

It's the easiest first step to take in your home buying journey. The mortgage professional will review your financial history (like your income and debt) and check your credit score, too.

It's important to note that prequalification doesn't guarantee mortgage approval. It's only an estimate. If you want something more definitive, get pre-approved.

Pre-approval is more involved because the mortgage professional will evaluate your credit score and do a complete verification of income and assets. Here's some of the documentation needed for pre-approval include:

Tax returns

W-2s or 1099s

Recent pay stubs

Recent bank statements from the accounts

Your credit score

As you can see, pre-approval gives you a much stronger idea of what you can afford.