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While both pre-qualification and pre-approval from a lender help identify your price range, a pre-approval letter can signal to your real estate agent and sellers that you're serious about buying a home.
Prequalification and preapproval letters both specify how much the lender is willing to lend to you, up to a certain amount and based on certain assumptions. These letters provide useful information about your likelihood of getting a loan but are not guaranteed loan offers.
A prequalification estimates how much you can afford, while a preapproval gives a better estimate and verifies your financial info for a loan. Learn more.
Prospective home buyers can use a prequalification letter to demonstrate their financial strength—and the likelihood they’ll be approved for a mortgage—to sellers.
You will complete a mortgage application and the lender will verify the information you provide. They’ll also perform a credit check. If you’re preapproved, you’ll receive a preapproval letter, which is an offer (but not a commitment) to lend you a specific amount, good for 90 days.
Pre-qualification estimates how much you may be able to borrow, based on a mostly informal evaluation of your finances. Preapproval carries more weight and requires documentation.
The main difference between prequalified and preapproved: Preapprovals hold more weight when trying to buy a home. Prequalifying involves providing some basic financial info to get a...
Pre-approval for a loan is a more detailed and formal process than pre-qualification, where a lender thoroughly evaluates a borrower’s financial background, including income, assets, credit history, and employment status. This process typically involves a hard credit check and may require documentation such as tax returns, bank statements ...
"A pre-qualification letter is all but required with an offer in our market," Kaderabek said. "Sellers are savvy and don't want to enter into a contract with a buyer who can't perform on the contract.
July 16, 2024, 7:36 AM PDT. Getty Images. Getting prequalified or preapproved for a mortgage can be two important steps when you want to buy a home. You’ll find out approximately how much you...