An important step in the home buying process is to get pre-approved for a mortgage. But have you ever wondered what the difference is between pre-approval and pre-qualification?
In this post, we will consider the similarities and differences between the two and how they relate to each other.
Pre-Qualification vs. Pre-Approval: Are They the Same or Different?
You might be wondering whether pre-qualification and pre-approval are different from each other.
The answer is that it depends on who you are asking. Sometimes, people use these two terms as if they are the same. But there is a distinction that can be drawn between the two.
What is Pre-Qualification?
If you are going to get both pre-qualified and pre-approved, pre-qualification comes first.
To get pre-qualified for a mortgage, you submit some of your financial data. Based on that data, you find out whether you qualify for mortgage, and how much you might be able to borrow.
Pre-qualification can be useful since it gives you some information to work with that helps you determine what you can afford.
But the limitation is that pre-qualification is based off your submitted data. Nobody checks that data at this stage against any objective assessments of your finances.
In other words, it is based on your word, but ultimately, a mortgage will not be. Pre-approval works differently, which is why it matters more.
What is Pre-Approval?
Pre-approval is like pre-qualification. But instead of basing the loan estimate on the data you furnish; the process involves pulling your credit.
Since there is some outside verification of your trustworthiness as a borrower, the pre-approval is more significant. With pre-approval, you can look forward to these benefits:
- As with pre-qualification, you get an idea how much you can borrow—but instead of a loose estimate, you will be looking at a specific amount. You also know roughly what interest rate you might be offered.
- You can lock in a low-interest rate through pre-approval when you go through Blue Square Mortgage.
- You know how much home you can afford and can spend less time browsing the market by cutting straight through to what you can buy.
- You have a better chance than a non-pre-approved homebuyer of purchasing your dream home. Pre-approval makes you more competitive.
So, while pre-approval and pre-qualification may sound like interchangeable concepts at first glance, you can see how getting pre-approved is more advantageous.
Get Pre-Approved Now for a Mortgage in Washington State
We can pre-approve you quickly for a home loan in Seattle or elsewhere in Washington State so that you can move forward with the home buying process. Have questions about pre-approvals, or ready to begin? Please call us today at (206) 352-6453.