Quite a few buyers want to know what the difference between a pre-qualification versus a pre-approval is. Confusing the two can often lead to disappointment for borrowers who believed they were actually pre-approved for a mortgage. To avoid a sticky situation later down the road; we’d like to explain the difference between the two!
Pre-qualification:
Is only based on information stated by the borrower.
Lender grants a pre-qualification without reviewing the clients documentation/application/credit.
It gives the borrower a loose idea of how much they may be eligible to borrow.
Pre-Approval:
Is released after the lender reviews credit and income documentation.
An application must be submitted for review as well as submission into underwriting (automated/manual)
Gives the borrower a more concrete understanding of how much they are eligible to borrow.
The best option is the ask your client to be pre-approved versus pre-qualified with their lender so that all the parties involved in the transaction will not run into any unnecessary confusion/disappointment later down the road!
Patriot Home Mortgage - Huntington Beach, CA
Paul Collier
Great reminder and explanation. I have several clients who believe it's the same thing. If I can't get a pre-approval, I get the most thorough and promising pre-qualification I can.
Jun 12, 2015 09:56 AM
Coldwell Banker Realty - Westfield, NJ
Westfield NJ New Homes Specialist
Hello Sallie, Welcome to the Active Rain community! This is something we should make sure first time home buyers understand. Thanks for sharing!
Jun 12, 2015 10:07 AM
Glendale, CA
Sally - Thank you for the information on between pre-qualification vs. pre-approval.
Jun 12, 2015 01:24 PM
RE/MAX Executive Realty - Happily Retired - Franklin, MA
Previously Affiliated with The Todaro Team
Good morning, Sallie Wheeler good explanation of the differences between the two....many thing they are one in the same....
Jun 12, 2015 07:49 PM
RE/MAX Executive Realty - Happily Retired - Franklin, MA
Previously Affiliated with The Todaro Team
eXp Commercial, Referral Divison - Kalispell, MT
Helping your Montana dreams take root
Welcome to ActiveRain! True, those two things are definitely different, and a pre-approval is more detailed/accurate.
Jun 12, 2015 11:00 PM
Rowlett Real Estate School - Panama City, FL
Rowlett Real Estate School / Owner and Instructor
Rowlett Real Estate School - Panama City, FL
Rowlett Real Estate School / Owner and Instructor
Welcome to ActiveRain, it's great to have you aboard. I look forward to reading more of your posts!
Jun 13, 2015 10:59 AM
Charles Rutenberg Realty - Hudson, FL
Hi Sally, Welcome to Active Rain. Thanks for the useful information between the two.
Jun 13, 2015 01:05 PM
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Jun 15, 2015 11:02 AM
#11
ColumbiaLand Realty - Columbia, SC
Your Realtor For Life!
Great first post here on Activerain! This is information every agent should know and understand! I look forward to reading more from you in the future!
Jun 15, 2015 09:07 PM
Florida Supreme Realty - Hobe Sound, FL
Serving the Treasure & Paradise Coasts of Florida
You're off to a rousing good start in my book Sallie & Shayla. Welcome and thank you for knowing the difference.
Jun 17, 2015 11:05 AM
Rainer
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