Mortgage Pre-Qualification Versus Pre-Approval: What Are their Benefits?

by The G.U. Crew 06/23/2019

Securing mortgage pre-qualification and pre-approval are two crucial steps which assure lenders that you will be able to afford payments. Pre-qualification and pre-approval are quite different, but they do share numerous benefits.

As you get ready to finance a new home, you have probably come across mortgage pre-approval, mortgage pre-qualification, or even both of them. So what does it mean to get pre-qualified versus get pre-approved for a mortgage, and what are the benefits of the two? Some people use these terms interchangeably, but there are crucial differences that every homebuyer should know.

The Similarities of Pre-Approval and Pre-Qualification

Mortgage pre-approval and pre-qualification have the same great benefits for anyone who wants to buy a home with a home loan. Here are the benefits:

1. Both can help to estimate the loan amount that you will probably qualify for.

This particular benefit can help you save time as you will start your home search with a goal in mind: looking only at properties that you know will fall into your budget or fit in your financial goals. It will also help you avoid the frustration of discovering that the house you are looking to buy is actually outside your budget.

2. Both can help convince sellers that you are a serious buyer when submitting your offer.

Regardless of whether you have a pre-approval or a pre-qualification letter, the seller will take you as a serious contender. For a home seller to accept your offer without fear, they will want to know that you will be approved successfully for a mortgage and the home sale will close. A pre-qualification and pre-approval letter can help show that you have a better chance of being approved for a home loan for the amount that you have offered on the home.

3. Both of them will make you stand out from the crowd.

Many home sellers will require a pre-qualification or pre-approval letter if you are planning to get a mortgage as one of the mandatory requirements. However, if it is not needed, have it at the back of your mind that the letter may help your offer stand out. This can be extremely helpful, especially in competitive real estate markets.

Additionally, you should know that neither pre-qualification or pre-approval letter is a guarantee that you will get a loan from the lender. Also, you are not duty-bound to get a mortgage from the lender who pre-qualified or pre-approved you. Pre-qualification or Pre-approval?

Since the terms mortgage pre-qualification and pre-approval are often used interchangeably, it could be challenging to know which one you need to purchase a home. This depends on how your mortgage lender defines the service. So, ensure you ask your lender exactly how they interpret pre-qualification and pre-approval. 

Then discuss with your real estate agent to find out which version of the letters has more credibility in your market. So that when it is time to make an offer, you will have what you need to give sellers confidence that you will be approved for a mortgage.

About the Author
Author

The G.U. Crew

After passing the Real Estate exam in 2006 Greg Uihlein started Marketing and selling homes in the Washtenaw, Jackson, Ingham and Livingston counties. In 2013 he was offered a position as the Sales director for the Howard Hanna Chelsea office. That same year Geri Uihlein, Greg’s wife a former Toyota sales associate obtained her Real Estate license and joined the Howard Hanna Company in the Ann Arbor office. This created a void in their dynamics of the past as Greg and Geri worked together successfully for many years prior in marketing. After much consideration and company support, Greg stepped out of management of the Chelsea office and he and Geri began THE G.U. CREW for the Uihlein Group of Real Estate Professionals. Directly following, Keven Numinen a former educator obtained his Real Estate license and joined the team bringing his compassion for detail and organization. The next Member to join the G.U. CREW was Helen Hughes bringing a warm, subtle and embracing touch to the team as a fixture in the Chelsea market. All of these great agents comprise of a distinct, able, caring CREW of very dedicated and multi generational Real Estate professionals with the goal to help our clients with their journey of Marketing or purchasing the perfect property or home, now serving Jackson, Ingham, Washtenaw, Oakland, Wayne and Livingston counties.