Pre-qualification vs. Pre-approval
When you are working with your lender, they’ll help you figure out how much you can afford. They can do this 2 ways; pre-qualification and pre-approval. Let’s look at the differences between the 2 and determine which is best for you and your timeline.
Pre-qualification 🔮
What it is: A pre-qualification from a lender gives you a rough estimate of how much you might be able to afford.
Who should use it: If you don’t plan on buying in the next 3 months a pre-qualification could give you a starting point for considering different homebuying strategies, lending options, or areas that are better suited to your budget.
Considerations: A pre-qualification is a rough estimate and does not guarantee a lender will give you that amount or specific interest rate. You can not bid on homes with a pre-qualification.
Pre-approval ✅
What it is: A pre-approval from a lender is an official declaration for exactly how much a lender is willing to give you to buy a home.
Who should use it: If you are actively bidding on homes with an agent or plan to start bidding on homes in the next 3 months.
Considerations: Depending on the lender, a pre-approval can last anywhere from 30-90 days. You can get pre-approved by multiple lenders in a 45 day period with it only affecting your credit score once.
Ask a homebuying coach which is right for you
