Have you ever wondered what the difference is between being pre-qualified and pre-approved for a mortgage? It can certainly be confusing, especially if you're new to mortgages, but they’re helpful when it comes to purchasing your new home.
When you begin to look for a mortgage, pre-qualification is the initial step in the process. This is when a lender looks at your income and debts to see if you're eligible for a mortgage and then they’ll give you an estimate of how much money they would be willing to lend you. But it's not a guarantee - the final decision will be up to the lender when you apply.
Mortgage pre-approval is a little different. A lender does a more thorough review of your financial situation, including a credit check. If you're pre-approved, it means the lender is confident you can afford the mortgage and is willing to give you a loan. But, it's also not a 100% guarantee of the loan.
Psst… With either option, it’s important to note you’re only trying to determine how much you’ll be approved for. Neither a pre-qualification of pre-approval will determine your interest rate, and you must apply for an actual mortgage to get those final numbers.
So... which one should you get when you're ready to budget for and purchase a home? Here's a full breakdown between the two so you know your next steps when you're ready to submit your mortgage application:
here's a closer look at what we'll cover
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what is mortgage pre-qualification?
When getting pre-qualified for a mortgage, you're giving the lender a broad financial picture of what your debt, income, and assets are to see if you're eligible for a mortgage. They'll give you an estimate of how much money they would be willing to lend you within minutes, but it's not a guarantee.
The kicker with getting pre-qualified is you're not submitting a loan application and the lender is not doing a financial background check. Getting pre-qualified for a mortgage is like saying "Hey, let's just see what you could get if you were to apply for a mortgage"
If you're certain you want to begin your home buying process, pre-qualification is not enough to help you get a mortgage, but it’s a great start if you’re just starting out and looking to determine your budget.
what is mortgage pre-approval?
Getting pre-approved for a mortgage is more involved when interested in getting a mortgage. This is when a mortgage lender gives you a letter stating how much of a loan you qualify for and what your interest rate will be. Mortgage pre-approval is different from mortgage pre-qualification in that pre-approval means the lender has checked (or pulled) your credit and verified your financial information.
Having a mortgage pre-approval is helpful because it gives you an idea of how much you can actually get approved to spend on a home and helps make the home buying process go more smoothly.
QUICK TIP: It's important to remember that mortgage pre-approval is not the same as final mortgage approval, which happens after you've made an offer on a home and the lender has verified all your information. But a pre-approval is a great first step in the mortgage process. |
what are the pros and cons of getting pre-qualified and pre-approved for a mortgage?
It's important to remember that mortgage pre-approval is not the same as final mortgage approval, which happens after you've made an offer on a home and the lender has verified all your information. But a pre-approval is a great first step in the mortgage process.
Pre-qualification
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Pre-approval
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why are pre-approvals SO important? 
Getting pre-approved for a mortgage is a bigger deal than getting pre-qualified. Pre-approvals are important for a number of reasons:
- It tells you how much money you can borrow, which gives you an idea of what kind of home you can afford.
- It shows sellers that you're a serious buyer who is likely to be approved for a loan, making them more likely to accept your offer.
- And finally, pre-approval gives you time to shop around for the best mortgage rate and terms before you're ready to buy.
- By getting pre-approved, you can be sure that you're getting the best mortgage possible. And that can save you thousands of dollars over the life of your loan.
QUICK TIP: Be careful when coming across other lenders, especially online offering a soft credit pull when seeking a mortgage pre-approval. When a lender runs a soft credit pull the results are just as good as getting pre-qualified not pre-approved. Make sure you read the fine print when lenders say they'll run a soft credit pull. |
what to expect when getting pre-approved with a mortgage from skyla?
When getting pre-approved for a mortgage at Skyla, it's a quick turnaround time - you can receive a decision within the same day. Here’s a list of the supporting documents you'll need to have when applying.
- Established credit (A good credit score will increase your chances of getting a low-interest rate)
- Down payment (or [tooltip3] if you're refinancing)
- Proof of income (30 days of your most recent paystubs)
- W2s (bring 2 years of your most recent W2s )
- Bring 60 days of bank statements if you're coming from another financial institution.
- Two most recent years of tax returns if you’re self-employed
- Additional verification information (auto loan, credit card, most recent retirement account statement)
- Our mortgage application can be completed online within 5 or 10 minutes. Once you submit and provide all the necessary documents, you can typically expect a decision the same day.
If you're mortgage shopping, feel free to explore our mortgage loan options. From Check it out!
are you ready to be pre-approved?
If you want to take the time and fix your credit, remove some errors, or notice unauthorized reports - I suggest making that your priority first. When you are ready for a mortgage, lenders will review your financial background and more likely offer a mortgage with a favorable interest rate if you have a good credit score. Here are some good tips when improving your credit.
If you're ready to move on to the next step and get pre-approved for a mortgage, then it's best to know how long it will take in getting an approved decision from a lender. Psst... All mortgage lenders' pre-approval processes are not the same but here's a typical look at the timeframe it would take to get pre-approved for a mortgage >
If you have any questions, our Mortgage Loan Officers are here for you. You can send an email, give us a call at 704.375.0183 x 1525, or visit any of our branches.
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