Mortgage Pre-Qual vs. Pre-Approval–What’s the difference?

Q: I’m buying my first home. Do I need a pre-qualification, a pre-approval or both? What’s the difference? Emma, Little Falls, NJ

A: A pre-qualification is an estimate of what a buyer can afford to borrow to buy a home. A pre-approval is a conditional approval for a mortgage loan based on the documented proof a borrower/buyer supplies.

Use a pre-qualification to determine what home price range you should be looking for homes.

A pre-qualification is not binding. When you are ready to actually buy a home, get a pre-approval from a mortgage broker (brokers are typically better than banks because they have access to multiple lenders, banks and loan products). Having a pre-approval in hand shows home sellers and Realtors that you’re serious about buying a home and are qualified to do so. Thanks for your question, Emma.

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