When I was looking to buy my first home after collecting enough savings, I kept hearing these terms called pre-approved and pre-qualified home loans. However, I wasn’t sure what they meant. After some research and a bit of personal experience of prequalify for home loan vs pre approval, I can break it down for you.
Pre Approved vs Pre Qualified Home Loan
Pre-Qualified is like dipping your toes in the water before diving in. It’s a useful way to gauge your budget before starting your home search. For this, keep in mind, since it’s based on the information you provide, it’s not a guarantee of the loan amount. On the other hand, pre-approved, is a more serious commitment. This makes you a stronger buyer because sellers see you as a serious contender, especially in competitive markets.
I made a list of differences between home loan prequalification vs preapproval to have a clarity regarding them:
Pre- Qualified Loan |
Pre-Approved Loan |
Initial step where you share your financial info, like your income and debts with a lender. |
Involves filling out a full mortgage application and documentation like tax returns and bank statements. |
They’ll give you an estimate of how much you might be able to borrow. |
The lender will conduct a thorough credit check |
It’s a pretty quick process, often done online or over the phone |
After this, if all goes well, you’ll receive a conditional commitment for a specific loan amount. |
I went through both processes when I bought my home. Getting pre-qualified helped me understand my budget, but when I got pre-approved, it gave me the confidence to make offers knowing I had solid backing from the lender. I hope this helps clear things up for you.
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What is Pre Approved Vs Pre Qualified Home Loan?
Dugant
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49 days
2024-09-30T20:12:02+00:00 2024-10-01T12:12:20+00:00Comment
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