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As you prepare to apply for a mortgage, you’ll come across terms like “prequalification” and “preapproval.” It’s essential to understand what these terms mean – they’ll guide your home search and help you focus on homes you can afford. When the time comes, they can also help you decide how much to offer and show the seller that you’re a serious buyer.

At the most basic level, prequalification and preapproval are types of mortgage approvals, and they refer to the steps a lender takes to verify that a client can afford a mortgage. In this article, we’ll review some common ways lenders use prequalification and preapproval. But first, a couple points to remember:

  • Every lender handles mortgage approvals differently. The steps and words involved change from lender to lender. Many lenders use prequalification and preapproval interchangeably.
  • No matter what type of mortgage approval you get, it’s not a guarantee that you’ll close the loan. Prequalification or preapproval is a way for a lender to help you and a seller estimate what you can afford. After you find a house and make an offer, the home will still need to be appraised by a third party and inspected for potential repairs before you can close the loan and buy the home.

A prequalification generally means that a lender collects some basic financial information from you to estimate how much house you can afford.

It’s common for a prequalification to rely on self-reported information, instead of verifying by pulling your credit report or reviewing financial documents. This means a prequalification is typically a ballpark estimate. It also means it’s less reliable than a preapproval, which usually involves your lender checking your credit score and reviewing bank statements and other documents.

As you begin searching for a home, real estate agents and sellers want to see you’ve been working with a mortgage lender so they know you can afford to buy a home. After you’ve been prequalified, you’ll usually receive a “prequalification letter” you can show to an agent or seller as proof you’re working with a lender. This is a good first step, but it typically won’t carry as much weight as a preapproval because a lender hasn’t yet verified your information. Going beyond a prequalification and getting preapproved is a critical step to showing you’re serious about buying a home.

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Equal Housing Lender
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Prequalify

Elite Mortgage Source, LLC
1616 Cape Coral Pkwy West, Unit 102 – #271
CAPE CORAL, FL 33914

don@elitemortgagesource.com
Ph: (239) 307-6300
Fax: (239) 673-7890
NMLS #1804247

Elite Mortgage Source

We understand that every borrower is different, and we offer a variety of products to meet your individual requirements. We make the process of securing a mortgage simple and straightforward by offering you the latest in financial tools that enable you to make sound financial choices.  We will even refer you to a local Realtor to work hand in hand with you to find your dream home. We service clients both locally in Cape Coral, Fort Myers, Bonita Springs, Estero, Naples, Alva, Punta Gorda, Port Charlotte as well as all other counties in Florida.

Prequalify

Elite Mortgage Source, LLC
1616 Cape Coral Pkwy West, Unit 102 – #271
CAPE CORAL, FL 33914

don@elitemortgagesource.com
Ph: (239) 307-6300
Fax: (239) 673-7890
NMLS #1804247

Elite Mortgage Source, LLC

We understand that every borrower is different, and we offer a variety of products to meet your individual requirements. We make the process of securing a mortgage simple and straightforward by offering you the latest in financial tools that enable you to make sound financial choices.  We will even refer you to a local Realtor to work hand in hand with you to find your dream home. We service clients both locally in Cape Coral, Fort Myers, Bonita Springs, Estero, Naples, Alva, Punta Gorda, Port Charlotte as well as all other counties in Florida.

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