Pre-Qualification vs. Pre- Approval

HubSpot Video


In the home buying process, knowing what you can afford should be step number 1.

Any serious real estate agent or seller is going to want to know if you’ve been pre-qualified” or “pre-approved” by a lender.

With the myriad of programs available, it’s important to educate yourself and then speak to a mortgage professional to better understand your options.

The process of getting qualified is called either “Pre-Qualification or “Pre-Approval” and although the terms sometimes are used interchangeably, there are major differences between the two.

Let’s look at those differences here:

Technically, a pre-qualification letter (which is sometimes called a pre-approval letter) is nothing more than an opinion letter. The letter is typically produced by a Loan Officer, who is a trained salesperson, but not authorized to approve loans. The letter is a best guess or opinion of your qualification based on some basic information.  He or she will likely ask you about your income, creditworthiness, your monthly obligations (such as car payment, student loans and rent), assets and general information about the property you are interested in. This process is far better than not getting pre-qualified at all, but there is a better option.

A true pre-approval is an actual approval from a lender’s underwriting department and is a commitment to lend subject to a contract of sale and an acceptable property. With many lenders, this is still a cumbersome process for the borrower with paperwork going back and forth for weeks.

Fortunately, Emerald Home Loans has expedited the process with its truly digital experience. With an easy online application and third-party verifications, EHL has significantly reduced the time and paperwork for the approval process.

In addition, our licensed mortgage consultants are available 7 days a week to answer all your questions.

Some of the benefits of a pre-approval are:

  • Giving confidence to the real estate agent(s) you are working with so that they can show you homes in the right price range.
  • Negotiating a better deal as the pre-approval removes a lot of uncertainty for the seller.
  • Winning an offer on a property that has multiple bids as the pre-approval makes you a stronger buyer.
  • Confidence and peace of mind.

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