What Does It All Mean?
Buying a home can be stressful, in large part because trying to understand all of the vocabulary and various terms associated with the process can be confusing. In many instances, terms are easily confused with each other, which can lead to problems for homebuyers, especially in competitive markets. One example of this is pre-qualification vs. pre-approval, which are two entirely different things. Even loan officers and real estate agents occasionally get the terms confused, so it definitely pays to know the difference. Read on to learn more about the difference between pre-qualification and pre-approval when it comes to the mortgage process.
Mortgage Loan Pre-Qualification
A mortgage loan pre-qualification is essentially an estimate of how much you can afford to spend on your future home in conjunction with how much money a lender would be willing to give you. The pre-qualification process is much simpler than that of a pre-approval, and because of this, it is often suggested to obtain one before you even start looking for a home.