What is the Difference between Pre-Approval and Pre-Qualification?

By
Title Insurance with Title Junction, LLC

If you’re looking for a home you’ve probably heard the terms pre-qualified and pre-approval thrown around a few times. But what really is the difference between these two concepts? How important is it that you obtain one or the other from your lender?

So what is pre-qualification?

Pre-qualifying for a loan is a very informal way to calculate how much you may be able to borrow from your lender. Most lenders will allow you to pre-qualify over the phone as long as you provide a few items like your income, your debt, and how large of a down payment you are able to afford. From this point you will be able to have an approximate estimate on how much your loan will be approved for.

Then what does it mean to be pre-approved?

A pre-approval is a much more formal commitment detailing the exact dollar amount that may be loaned to you. In order to be pre-approved your financial records will be analyzed and a document will be signed and distributed by your lender. Taking the initiative to get pre-approved shows both sellers and realtors that you are serious about purchasing a home and one that will fit your budget exactly. 

 

About Title Junction: Title Junction (http://www.title-junction.com) is a full service real estate title company serving the area of Fort Myers, Cape Coral, and the entire state of Florida. The company handles a number of real estate title services for both commercial and residential properties and the employees can help a foreign investor or foreign seller navigate through the tricky FIRPTA regulations. Employees of Title Junction can also act as a witness in courtesy closings, an escrow agent or a notary public. The company was founded in 2005.

Posted by

Jennifer Ferri

Owner and Operator

Title Junction LLC

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Rainmaker
2,284,554
Tony and Suzanne Marriott, Associate Brokers
Haven Express @ Keller Williams Arizona Realty - Scottsdale, AZ
Serving Scottsdale, Phoenix and Maricopa County AZ

Thanks for a very clear explanation of the differences between "pre-qualification" and "pre-approved" Jennifer Ferri .  Looking forward to reading more by you - so am now "following" you!

Apr 25, 2016 06:32 AM #1
Rainmaker
1,366,334
Gary L. Waters, Broker Owner, Waters Realty of Brevard, LLC
Waters Realty of Brevard, LLC - Rockledge, FL
... a small office, delivering big service!

There is indeed a big difference which many first time (and otherwise) buyers do not understand.

Apr 25, 2016 06:58 AM #2
Rainmaker
185,027
Jennifer Ferri
Title Junction, LLC - Fort Myers, FL

Agreed Gary Waters! 

Apr 25, 2016 07:00 AM #3
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Rainmaker
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Jennifer Ferri

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