Pre-Approval vs Pre-Qualification - Which is Better?

Pre-Approval vs Pre-Qualification - Which is Better?
Buying a home starts with getting pre-qualified. Pre-approval follows. When someone is pre-approved they have conversed with a lender or has filled a form out online. Questions are answered. The loan officer calculates income to debt ratios and the applicant is approved or denied based on that information. In addition to the questionnaire, the applicant has to supply supporting documentation that demonstrates that the details given on the application are true.

Bank statements, pay stubs, w2's, and tax returns are common documents that will be required. Having those documents bundled up into pdf format makes the whole process go more smoothly when it is time to start the loan process.

Pre-qualification is when a person only fills out forms or speaks to the lender without the supporting documentation. Before a property can be purchased it is imperative that the buyer completes the pre-approval process.

Pre-Approval is a sign of strength in the seller's eyes. If the selling party has two similar offers in hand and one has a pre-qualification and the other a Pre-approval it is obvious which offer will rise to the top.

I’m John Cunningham with eXp Realty. Thanks for stopping by my channel. Every Thursday I add new videos for you. The topics span the gambit and I always want to give information out that is going to help you with your real estate goals. If you have a real estate topic you’d like me to cover let me know. You can message me by any of the means below.

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[NicoleBowdleParkCityRealEstate]

Love that you are explaining the difference between the two!! I always make sure my buyers are submitting a pre-approval letter with there offer.

[PatrickFieldsRE]

Thanks for the explanation, makes sense!!

[RobertSlatteryrealestate]

Great video & info! Many don't know the difference

[HoustonKatyHomesGroup]

This is great information for home buyers and I agree pre approval is so much better.

[AlysonWahl]

Buyers position themselves in a market like this in a better light to come out of the gate with their financing as buttoned up as possible!

[CaseySerafinoLee]

Always better to get the preapproval....so you REALLY know, right?

[Itsellasky]

Interesting. I submitted docs and they ran my credit. The also ran me through the AUS and I was approved, but the gave me a prequalified letter. I also gave them bank and proof of income... I’m with a home builder..what are your thoughts?