86% of sellers prefer homebuyers with pre-approval. At the same time, the majority of homebuyers get pre-qualified first.
On average, a home buyer views 9 houses in their home shopping. It generally takes 8 weeks to search and get the house. However, both options can help you get a good deal.
Start your home-buying journey with a mortgage pre-approval.
Get Pre Approved for a Mortgage🏡
Select Your Loan Type
-
New Home Purchase
-
Mortgage Refinance
-
Cash-out Refinance
Pre-qualification or Pre-approval Mortgage 🤔
- Mortgage pre-approval is an official document from the lender to the homebuyer. It provides the estimated amount a homebuyer can afford to buy a house.
- Pre-qualification is more like a ballpark number from a lender. It gives homebuyers an idea of what range they should go for.
- While some homebuyers opt for both options, most of the sellers prefer buyers with pre-approval.
Pre-approval vs. Pre-qualification: What Do Home Sellers Prefer?
A pre-approval letter is a more authorized and official document from the lender. Whereas pre-qualification gives you a rough estimate of how much you can afford.
Mortgage pre-approval is the first choice for home sellers. However, pre-qualification can help you get a rough estimate of the mortgage. 86% of the sellers prefer buyers with pre-approval.
What Is Pre-approval?
A mortgage pre-approval is an evaluation that a lender does to determine the borrower’s credit limit. The lender conducts a thorough credit check before they provide a loan amount.
It is important when buying a house, as it may help you seem like a serious buyer. Around 47% of homebuyers don’t get pre approval. You may have to make multiple applications to get qualified for it.
Documents Needed
In case, you qualify for a certain type of loan, you have to submit documents according to the specified conditions.
Here are all the standard documents you will need for mortgage pre-approval:
- Social security card
- Bank statements
- Credit report
- Pay stubs
- Personal Id
- Tax documents
- Investment account statements
- Monthly debts list
Pre-approval Letter
The pre-approval letter is an official letter from the lender. The letter specifies all the details of the borrower and the maximum amount of loan they can get.
The pre-approval states that the borrower can be eligible for the loan if their financial condition remains the same. It also includes certain terms and conditions a borrower has to follow to get the loan.
What Is Pre-qualification?
A pre-qualification is an estimate of the loan amount a borrower can receive from the lender. The homebuyers can get the pre-qualification letter without any verification and credit checks.
Most buyers opt for this process to get a rough figure for their home purchase. The pre-qualification doesn’t guarantee you a firm number. Henceforth, most sellers prefer pre-approval over pre-qualification.
Documents Needed
Here are the documents you need to get mortgage pre-qualification:
- Personal Id
- Credit history
- Pay stubs (if required)
- Bank statements
- Other standard documents (if required)
Difference Between Pre-approval and Pre-qualification
Pre-approval and pre-qualification are used interchangeably but differ from each other in various ways.
Pre-approval is an indirect commitment from the lender to provide a loan based on the borrower’s financial condition.
On the other hand, pre-qualification is a rough estimate of the amount a borrower can get. There is no assurance or guarantee, and there are no credit checks or reviews of finances. Most of the buyers get pre-qualification to get a rough idea of the loan amount they can get.
| Pre-approval | Pre-qualification |
| A proper credit check is needed to get pre-approval. | The self-reporting method is acceptable in pre-qualification. |
| It provides a firm figure a borrower can get. | In pre qualification, the estimate is not firm. It is based on the homebuyer’s estimates without verification. |
| Pre-approval builds trust among buyers and real estate agents. | Real estate agents and home sellers don’t entertain homebuyers with pre qualification. |
| All standard documents are required for verification. | A few documents are required. |
Which One Should You Choose?
Pre-approval is the ideal option if you are serious about home buying. Many buyers get rejected for pre-approval. But there are fair chances of you getting pre-approval, as 53% of buyers get pre-approved by lenders.
Whereas with pre-qualification, you can get a rough figure and easily filter your desired houses. Many homebuyers opt for both to increase their chances of buying their dream house.
Explore Homes For Sale Within Your Budget
Find Your New Home With Houzeo
With thousands of property listings, Houzeo.com is one of the biggest property listing sites in the US. Find condos, townhouses, co-ops, and other types of homes for sale on Houzeo.
» Need More Clarity? Read these exclusive Houzeo reviews and learn why the platform is the best in America’s competitive housing market.
Frequently Asked Questions
How long does a pre-approval for a mortgage last?
Generally, the pre-approval for a mortgage lasts for 60 to 90 days. The lender provides a specific period for the mortgage.
How accurate is a pre-qualification letter?
Pre-qualification is not as accurate as a pre-approval letter. Most of the time, the mortgage is denied on the pre-qualification letter because of a lack of verification.
Does pre-qualification require a hard pull?
The pre-qualification doesn’t require any credit checks or bank statement verification. Therefore, it undergoes a “soft” pull process to complete the application.
Related: prequalification vs preapproval,mortgage prequalification vs preapproval
.webp)
