Pre-qualification vs. Pre-approval: What's the Difference?
As you embark on your home-buying journey, two terms you’ll frequently encounter are “pre-qualification” and “pre-approval.” Understanding the distinction between these two is crucial for a smooth home-buying experience.
Pre-qualification is an initial step where you provide some initial financial information to the credit union, which then provides an estimate of the mortgage amount you might qualify for. This process is quick and easy, and can often be done online or over the phone. Pre-qualification doesn’t require a detailed examination of your financial history and it only provides a ballpark figure of your home buying power.
Pre-approval, on the other hand, is a more comprehensive and formal process. You’ll complete an official mortgage application and supply a loan officer with the necessary documentation to thoroughly check your financial background and current credit rating. If approved, the loan officer will offer you a specific mortgage amount at a certain interest rate. Pre-approval is a powerful tool for house hunting, showing sellers that you’re a qualified buyer.
It’s worth noting that neither pre-qualification nor pre-approval guarantees a loan, but they help streamline your home-buying process.
Rates, fees and terms as of April 27, 2024 and subject to change without notice
