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Pre-Qualification vs. Pre-Approval: What’s the Difference?

If you have been considering a home purchase, you most likely have come across the terms “mortgage pre-approval”, “mortgage pre-qualification”, or both. Mortgage pre-approval and pre-qualification are both significant steps in the mortgage process, but you may be scratching your head about the difference between the two. Michele Harmon Team has the scoop on how each of these processes work, and what they mean in regards to your buying power.

What is a Mortgage Pre-Qualification?

A mortgage pre-qualification gives you a general indication on if you could be approved if you chose to formally apply. A pre-qualification can be obtained with a phone call or brief online application.

Pre-qualification is often seen as the first step in the mortgage process, with pre-approval being the next step.

What is a Mortgage Pre-Approval?

According to, “a mortgage pre-approval requires submitting a formal loan application and providing extensive documentation regarding your income, savings and debt, such as credit cards and student loans.”

Your lender will use this information to determine whether to offer you a loan, the maximum amount they will be willing to offer, and your interest rate. See the infographic below for a quick rundown on the differences between Pre-Approval and Pre-Qualification.

Which Should I Choose?

Pre-Qualification and Pre-approval both indicate to lenders that you are eligible for a mortgage. However, pre-approval is a lot more detailed and is more likely to result in loan approval.

“Pre-Approval carries more weight because it means lenders have actually done more than a cursory review of your credit and your finances, but have instead reviewed your pay stubs, tax returns and bank statements,” says Greg McBride, CFA, Bankrate’s chief financial analyst.  “A preapproval means you’ve cleared the hurdles necessary to be approved for a mortgage up to a certain dollar amount.”

Since Pre-Qualification does not always result in a loan approval, it is important for you to obtain a Pre-Approval letter prior to submitting an offer on a home. If a seller receives multiple offers, chances are that they will select the offer that includes a Pre-Approval letter because it has a higher chance of making it to closing day. Michele Harmon Team recommends getting Pre-Approved prior to your home search. Not only will sellers take you more seriously, but you will be aware of how much home you can afford, and your interest rate. If you are unable to obtain Pre-Approval, the process will provide you with action items you may need to take in order to receive a Pre-Approval.

Don’t forget: just because you obtain Pre-Approval or Pre-Qualification from one lender, you do not have to actually get your mortgage through that specific lender. It can be helpful to shop around prior to committing to a lender. Rates and terms can vary between lenders! Shopping with multiple lenders will allow you to determine if you are getting the best deal. Click here to access Michele Harmon Team’s list of lending and financial help partners we have worked with and recommend! Our team will have a great peace of mind if you use them, as we know they will take excellent care of you. Call Michele Harmon Team at 713-818-1330 for questions or to get started on the home buying process! At Michele Harmon Team, your home truly is our business and it would be our pleasure to work with you!

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