Pre-Qualified Vs. Pre-Approved

To get “pre-QUALIFIED,” a lender will just do a quick review of some of your basic numbers, like your estimated income, savings, and debt. They will typically do a “soft inquiry” of your credit worthiness, and this does not impact credit scores. Then they can give you an ESTIMATED amount you may qualify to borrow. This is a good first step for you because you may find out right here that you are not going to qualify for the loan you’ll need to buy a house. If that happens, you have a starting point to work from. A quality lender can give you guidance on ways to improve your credit and educate you on different loan programs you may need to utilize later on.

Getting “pre-APPROVED” is an actual deep dive into your numbers to verify the exact loan amount you qualify for. This is done via a review of documents like your pay stubs, bank statements, W-2 and more, as well as a hard credit pull.  When you are “pre-approved” for a loan, this is proof that you will have the money to pay for the houses you put offers on*.

(I use an * because there can be hiccups that arise during the underwriting process, sometimes. Don’t worry—this wouldn’t put you on the hook for a house you can’t afford! If you have questions, shoot me a text or email and we can discuss them.)

Does Being Pre-Approved Matter?

Yes! In today’s uber-competitive seller’s market, an offer that isn’t backed up by a pre-approval isn’t even considered. The seller isn’t going to waste their time with someone who may not be able to actually buy the house. When I put your offer in on a home, I will first have your lender draft a specific pre-approval letter for that offer. If it’s a multiple-offer situation, I can even have your lender call the seller to validate how awesome your financing is. These strategies make your offer stand out and give you a better chance of being accepted!

To get pre-approved, I recommend you speak with more than one lender. See some good ones here. That way you can be sure you don’t miss a product that may work best for your financial situation. Don’t worry about that messing with your credit: Mortgage-based credit inquiries within 45 days of each other have no adverse effect on your credit score.