What is Pre-Qualification?

Pre-qualification is an initial assessment of your financial situation based on self-reported information.
It provides an estimate of how much you may be able to borrow for a mortgage based on factors such as
income, assets, and debt.

Pre-qualification does not involve a detailed review of your credit history or verification of your financial
documents.

Benefits of Pre-Qualification

• Quick and Easy: Pre-qualification can often be done online or over the phone in a matter of
  minutes.
• Helps Determine Affordability: Provides an estimate of your home buying budget, helping you
  narrow down your search.
• No Impact on Credit Score: Pre-qualification typically does not involve a hard inquiry on your
  credit report, so it won’t affect your credit score.

What is Pre-Approval?

Pre-approval is a more in-depth process where a lender reviews your financial information and credit
history to determine the amount, you’re eligible to borrow for a mortgage.
It involves submitting documentation such as pay stubs, bank statements, and tax returns for
verification.
Pre-approval gives you a more accurate picture of your borrowing capacity and shows sellers that you’re
a serious buyer.

Benefits of Pre-Approval

• Increased Credibility: Sellers view pre-approved buyers as more serious and financially
  prepared, giving you an advantage in competitive markets.
• Accurate Budgeting: With a pre-approval letter in hand, you’ll know exactly how much you can
  afford to spend on a home, streamlining your search process.
• Faster Closing Process: Since much of the paperwork is already completed during pre-approval,
  the mortgage process tends to move more quickly once you find a home.

Key Differences

• Pre-Qualification: Based on self-reported information, provides an estimate of borrowing
  capacity, does not involve a credit check or detailed documentation review.
• Pre-Approval: Requires submission of financial documents, involves a credit check, provides a
  more accurate borrowing capacity, and increases credibility with sellers.

When to Get Pre-Qualified vs. Pre-Approved

• Pre-Qualification: Ideal for initial budgeting and getting a general sense of your home buying
  power.
• Pre-Approval: Recommended when you’re ready to start actively searching for homes and
  making offers.