Mortgage pre-qualification is a good first step on the road to homeownership, but pre-approval goes further. Pre-qualification is based on an informal evaluation of the borrower’s finances. Pre-approval comes after a more thorough examination and results in an offer to lend a certain amount of money. A pre-approval letter is given to the borrower. To get home loan pre-approval, review your credit score, credit history, and debt-to-income ratio. Financial information including W-2 forms, and possibly pay stubs and tax returns, needs to be provided to the lender. It is advised to contact multiple lenders to find the best rate.
- Mortgage pre-qualification occurs before pre-approval and is based on a less formal financial evaluation.
- Pre-approval will depend on your credit score, credit history, and debt-to-income ratio.
- Comparing offers from multiple lenders can end up saving you thousands of dollars over the course of your mortgage.
“A preapproval letter indicates to both real estate agents and home sellers that you’re financially able to buy a home”