Homebuyers often get confused about the difference between preapproval and prequalification. Both can be helpful steps in the home buying process, but there are a few key differences.
- Prequalification is an informal review of your finances and credit that determines if you would potentially qualify for a home loan
- A prequalification can also provide a rough estimate of how much home you may be able to afford
- To get prequalified, you provide only basic information about your credit, debts, income and assets
- You usually don’t need to provide documents to get prequalified
- Online calculators may provide the same estimated qualification information
- Preapprovals are a more formal review of your finances and credit, and how much house you can afford
- You’ll need to provide documents like tax returns, pay stubs, and account statements to a lender to get preapproved
- Your lender will also check your credit history for a preapproval
- After your information is processed, your lender will give you a preapproval letter
- The preapproval letter shows real estate agents and sellers that you have financing available and are serious about purchasing a home
Because a prequalification is only an estimate based on self-reported information, a preapproval is often a better choice for potential buyers. Once you find your perfect home, a preapproval may also make your offer more favorable to sellers because it shows you are working with a lender. A preapproval also helps speed up loan processing because you’ve already established a relationship with your lender and they have many of your documents on file.
How To Get A Home Loan Preapproval
To get preapproved for a home mortgage loan, please complete our online application. You'll need to provide documentation for your income and assets as part of the process. Once we review your application and supporting documents, we will be able to provide a preapproval letter.