{"id":319,"date":"2023-04-18T20:53:12","date_gmt":"2023-04-18T20:53:12","guid":{"rendered":"https:\/\/blogunitedpurpose.azurewebsites.net\/?p=319"},"modified":"2024-07-30T15:32:10","modified_gmt":"2024-07-30T15:32:10","slug":"pre-qualification-vs-pre-approval","status":"publish","type":"post","link":"https:\/\/blog.unitedpurposemortgage.com\/index.php\/pre-qualification-vs-pre-approval\/","title":{"rendered":"Pre-Qualification vs. Pre-Approval"},"content":{"rendered":"\n

Understanding How Much Home You Can Afford in Order to Plan For that Dream Purchase<\/p>\n\n\n\n

If you\u2019re in the process of looking to buy a home, you\u2019ve probably come across the terms \u201cpre-qualification\u201d and \u201cpre-approval\u201d when seeking a mortgage loan. What exactly do these things mean? Oftentimes the two terms are used interchangeably or even get confused for each other, so it\u2019s important to understand the differences before you move forward. A pre-qualification is a bit of a less in depth process than a pre-approval, with a different verification process used to determine how much you qualify for.\u00a0<\/p>\n\n\n\n

Mortgage Pre-Qualification <\/strong><\/h2>\n\n\n\n

Pre-qualification is one of the first steps you can take in the homebuying process. You will provide a few financial details to your mortgage lender, which might also include a soft credit inquiry<\/a>. Your lender will then give you an estimate of how much you\u2019ll be able to borrow, along with interest rates you qualify for. <\/p>\n\n\n\n

A prequalification is a great way to give someone insight into how much they could expect to borrow. You can also get a better idea on some of the different loan programs, and how monthly payments would stack up. Because the information you provide to a lender is not completely verified through a prequalification, you can not expect a guarantee of the mortgage amount  approved. It might be beneficial to try and get verified from a couple different lenders, so that you\u2019ll be able to compare various interest rates and monthly payments.<\/p>\n\n\n\n

Prequalification + Credit Score<\/strong><\/h3>\n\n\n\n
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Credit bureaus like Experian allow you to check your credit at no cost. Image courtesy of <\/strong>Experian<\/strong><\/a>. <\/strong><\/figcaption><\/figure>\n\n\n\n

Most times, mortgage lenders will conduct a soft credit inquiry to catch a glimpse into where your credit standing is. If you\u2019re looking to get prequalified from a lender, it\u2019s important to check how they run the prequalification process, and if a regular credit check is involved. Most credit checks are counted as one inquiry on your credit report, which can have an impact on your credit overall. <\/p>\n\n\n\n

If you\u2019re worried about your current credit standing, it might be best to avoid the mortgage lenders who conduct the credit checks. Overall, getting a prequalification earlier on in the homebuying process can give you more time to work on credit standing and try and qualify for a bigger loan, or one with a better interest rate. The prequalification process is also rather quick, usually online or by the phone. <\/p>\n\n\n\n

What If I Don\u2019t Qualify for Pre-Qualification?<\/strong><\/h3>\n\n\n\n

More often than not you can expect to get prequalified from at least one mortgage lender, but there are times where prequalification will not be approved. If you happen to run into the problem of not prequalifying, there are several things to work on to help improve your chances:<\/p>\n\n\n\n