What’s the Difference Between Prequalified and Preapproved?

When you get prequalified, you get an estimate of an amount you may be able to borrow based on the information you provide regarding your finances. Prequalification also allows you to discuss your goals and needs with your lender to find the right mortgage option. Once you’ve been prequalified, you will usually get a letter to prove that you’ve been working with a lender. Often, prequalification is based on self-reported information instead of verifying your information with a credit score and reviewing other financial documents, making it less reliable than getting preapproved.

With preapprovals, you receive a letter that shows you have an offer from your lender to lend you a specific amount of money, but you’re not committed to using it. Preapproval letters are good for 90 days. Your lender may need to review pay stubs, tax returns, and even your Social Security card. Sellers love to see Buyers with preapproval letters, as it shows that you’re serious about purchasing a home and adds more credibility to your offer.

It’s important to get approval from a lender prior to making an offer on a home, as a Seller and their Realtor may not see your offer as genuine without it. Even if your offer is accepted without approval, putting in an offer without it can slow the process of a mortgage loan application.

Have questions about real estate-related topics? Let us know what you’d like us to write about! Send us an email at homerrealestate@gmail.com or message us on social media @homerrealestate.

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