Don’t Confuse Pre-Qualification with Pre-Approval – Boston Home Loan Jargon

As a senior loan officer serving the Greater Boston area, I work with lots of first-time homebuyers who feel just a bit intimidated by all the mortgage terminology. That’s why I always spell it out for them simply, clearly, and in a way that’s easy to understand.

boston-mortgage-boston-home-loan-boston-refinance-prequalify-preapprovedOne question I commonly asked is about the difference between a pre-qualification and a pre-approval. They sound and seem similar enough on first glance, but in reality there’s a crucial distinction to be made. Confusing the two terms can be an unfortunate mistake.

Defining Pre-Qualification

Being pre-qualified will typically be the first step of securing your new mortgage. Much less intensive than a pre-approval, the pre-qualification process involves supplying your lender with all your basic financial information. You share your income, assets, and, of course, your debt with your lender, who then considers and analyzes the data to give you a rough estimate on the value of the mortgage you can qualify for.

Perhaps the biggest difference is that pre-qualifying does not include a credit report, and thus happens much faster. Pre-qualifications may be quite casual and can usually be conducted online or over the phone. The estimate you receive isn’t binding; it’s a rough idea on what you could be able to get. The lender will explain your mortgage options, discuss your needs and ambitions, and guide you through the next steps–one of which could be getting pre-approved.

Defining Pre-Approval

Unlike a pre-qualification, a pre-approval does include a bona fide credit check, and is much more labor-intensive for all parties. While the former may be free, the latter usually comes with an application fee. You’ll need to fill out a pile of paperwork and submit copious documentation, but in the end all that hard work will pay off.

At the conclusion of a pre-approval, you’ll be rewarded with the exact amount of the mortgage you’re approved for. Better yet, you may be able to secure a particular interest rate–or at least get a good idea of what it will look like. A pre-approval is binding, and allows you to search for homes with the confidence of knowing what you can afford. It also makes you more attractive in the eyes of the seller, who will have the reassurance of knowing you’re making a serious offer.

In short, pre-approvals take more work and involve an in-depth credit check, but they can be a critical step in finding the home of your dreams.

If you have any questions or inquiries, don’t hesitate to contact me for more information.

Phil Ganz (354 Posts)

Philip D. Ganz is a Boston Mortgage Broker and Boston Home Loan specialist. For information, expertise, consulting, or advice about home loans, refinancing mortgages, or commercial property loans, contact Phil with no obligation: 617-529-9317


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