Many people ask what is the difference between the two and is one more appealing then the other? When buying a home the terms pre-qualifying and pre-approval are used frequently and knowing the difference can help take some of the stress out of the home buying experience.
Pre-Qualifying is the very beginning phase. The lender will briefly look at your overall financial situation and give you an idea of what you qualify for. This process can be generally done over the phone and is based on information you provide to that lender. It is not exact and most of the time does not include a credit check. Pre-Qualifying is not as secure because it is just an estimate. On the bright side this will help you get you in the ballpark of homes you may qualify for.
Pre-approval is a more involved process. For a pre-approval you will complete an official application and submit the necessary documents to be reviewed. The lender will then check your financial background and will do a credit check. This option is a more accurate and means you are more likely to be approved for that loan amount. With a pre-approval you can search for homes with confidence not having to worry if you can or cannot afford it.
Both are great starting points for your home searching adventure but being pre-approved is a lot more appealing and provides evidence that you are a serious buyer.
