A pre-qualification is a quick estimate based on what you tell a lender about your income, debts and savings. A pre-approval goes further: the lender checks your credit and reviews your documents. Sellers and agents take a pre-approval more seriously because the information behind it has been verified.
Pre-qualification is a useful first conversation. It can be done in a few minutes and gives you a rough price range. Nothing has been verified, so it carries little weight with a seller.
For a pre-approval you complete an application, authorize a credit check and provide pay stubs, tax forms and bank statements. The result is a letter stating the loan amount you are approved for, subject to conditions such as an appraisal.
Neither one is a final loan approval. That comes after you have a signed contract on a specific home and the loan has been through underwriting.
Related questions
Does a pre-approval hurt my credit?
It involves a credit inquiry, which can have a small, temporary effect on your score. Mortgage inquiries made within a short shopping window are generally treated as one.
How long does a pre-approval last?
Typically a few months. Documents and credit reports go out of date, so a letter may need to be refreshed if your search runs long.
When should I get pre-approved?
Before you start touring homes. It sets your budget and lets you move quickly when you find the right place.
