Here’s why all homebuyers should seek pre-approval over pre-qualification.

What’s the difference between being pre-qualified and being pre-approved? If you’re pre-qualified, it means that you’ve relayed some super basic information to a bank or lender and they’ve given a generic letter simply based on what you’ve said. Pre-approval, on the other hand, is much more involved. 

Instead of just telling someone about your financial picture, a pre-approval requires you to send in specific documents that can be reviewed and verified—bank statements, proof of employment, pay stubs, etc. In a sense, a lender will be “pre-approving” your whole economic profile. Unlike a pre-qualification, your information will be sent through multiple channels to guarantee your ability to purchase. 

“Eliminate the likelihood of unpleasant surprises by painting as complete of a financial picture as possible.”

Unfortunately, you could chat with a lender and think that what they’ve done is tantamount to a pre-approval. In reality, what you’ve received was merely a pre-qualification. That’s not necessarily your fault, though. Perhaps the lender didn’t clarify what, exactly, they need from you in order to give you a pre-approved status. Remember: The more information you can provide, the better. Eliminate the likelihood of unpleasant surprises by painting as complete of a financial picture as possible. 

If you aren’t as forthright as you can be and opt only for a pre-qualification, you might hit some roadblocks as you approach closing. The underwriters of your loan might find something on your latest bank statement that gives them pause, or they could be surprised to learn that you lost your job—or any number of other things, really. Your best hedge against having your transaction derailed is to get pre-approved from the start. Gather up as many of your documents as you can before speaking with your lender. 

As always, if you have further questions about this or any other real estate topic, don’t hesitate to reach out to us via phone or email. We know some reliable local lenders that we’d be more than happy to connect you with. We can assist you with whatever buying, selling, or investing needs you may have, as well.