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Pre-qualified vs. Pre-approval: What's the difference?

Getting pre-approved or pre-qualified can be a great way to show sellers you're serious about buying a home. If you're looking in a competitive market, it can really help you stand out.

A helpful home buying tip: Before you start viewing houses for sale, it's important to understand the difference between these two first.

Pre-qualified

A home loan pre-qualification is something you can do yourself. It provides a good indication of what homes you can qualify for.

But, this is only a preliminary step in obtaining a loan. None of this information is verified. This is where pre-approval comes into play.

Pre-approval

Pre-approval tells sellers and agents that you're serious about buying a home. It:

  • Let's you know what's affordable up front
  • Shows sellers you're serious about buying
  • May speed up the home-purchasing process

With a home loan pre-approval in hand, your lender will have verified all the information you included on your application. This tremendously helps home sellers since they know that financing will not be a problem for you. (And it can place your name at the top of the list if their house has multiple bids!)

Note that this is only pre-approval though, not the final step. Lenders will require that you specify a property before locking the rate.

Home Buyer Tip

Get pre-approved before you make your first offer

Your negotiating power increases substantially when your financing is pre-approved. In fact, many sellers will not work with potential homebuyers unless they are pre-approved.

Get Started!