Pre-Qualified or Pre-Approved??

As you start your housing search you may hear phrases like:
“Make sure you are pre-qualified!” or “Get pre-approved!”
What do these mean, which one is best for you and how will they impact your search?

Pre-Qualification:
This is traditionally a review of your credit report and credit score.

This process may also include the completion of a loan application that your loan officer or mortgage consultant will review with you and run through an automated underwriting system. That automated system will let your loan officer/mortgage consultant know whether what you have told them in terms of income, assets and credit will fall within the general mortgage guidelines.

However, that is subject to you providing acceptable documentation to the lender. If you have clean credit, a strong job history, good assets and reserves, the prequalification letter is probably going to meet your needs as you look for a home.

Pre-Approval:

However, if you find you are borderline in any area, or if you just want to get the mortgage approval done prior to shopping for a home, a “true” preapproval is the way to go. Your loan officer/mortgage consultant will take a full loan application and collect all your documentation of income and assets. Your application will be submitted for processing and review by an underwriter.

While a prequalification will take around 30 minutes, the preapproval process will be more like three to five days (the underwriter typically needs this much time to review your file).


What you then get is a preapproval commitment letter that you can use with your agent as you shop for houses. The loan would then be subject to an acceptable appraisal on the property you choose.

Make sure when speaking to your lender that you get their definition of pre-qualification and pre-approval. Not everyone has the same definition. Find the best option for you as you start your home search. Once this moving piece is in place, your adventure can begin!