Pre-Qualification vs. Pre-Approval: What Every Homebuyer Should Know
We've all done it.
You hop on Zillow "just to look," and before you know it, you've mentally decorated the living room, picked out patio furniture, and decided where your holiday decorations will go.
But before you start touring homes, there's one important step that can save you time, stress, and disappointment: talking with a lender.
A quick conversation today can help you avoid surprises tomorrow.
We sat down with John Pasquinelli from 77 Lending to answer some of the most common questions we hear from buyers about pre-qualification and pre-approval. While the terms sound similar, they serve different purposes, and understanding the difference can help make your homebuying journey much smoother.
When should I talk to a lender? Earlier than you probably think.
Even if you're six months to a year from buying, having a conversation with a lender can help you understand where you stand financially and what steps, if any, you should take before shopping for a home.
Think of it as building your roadmap instead of guessing your route.
What is the difference between a Pre-Qualification vs. a Pre-Approval? This is where many buyers get confused.
Pre-Qualification
Think of this as your starting point or a ballpark estimate.
You’ll share basic financial information with a lender like income, assets, and debts. Based on this information, they will estimate what you may qualify to borrow.
Keep in mind this is only an estimate, because your information has not been fully verified. It is not a guarantee and shouldn’t necessarily be used to determine your max home buying budget.
It's a great first step if you're just beginning your home buying journey.
Pre-Approval
A pre-approval takes things a step further.
Your income, assets, and financial documents are reviewed and verified by an underwriter, giving you a much clearer picture of what you can borrow.
Because your information has been verified, sellers often view a pre-approval more favorably than a pre-qualification.
Does a pre-approval count as my conditional approval? Not quite.
For buyers building a new home with Garman Homes, a conditional approval happens after you're under contract.
At that point, your purchase agreement and loan documents are submitted to underwriting for review. This step is part of the homebuilding process and is required within the first 30 days after signing your contract.
Don't worry, John and the 77 Lending team are here to help and can walk you through the steps.
So...what should you do next? Don't wait until you've found your dream home.
Talking with a lender early gives you a better understanding of:
- What you can comfortably afford.
- Which loan programs fit your situation.
- What your monthly payment could look like.
- Whether there are any steps you can take now to strengthen your buying position.
If you're not sure where to start, we highly recommend reaching out to John with 77 Lending. He's fantastic at answering questions, explaining your options, and helping first-time buyers feel comfortable throughout the process.
Home buying can feel overwhelming, but it doesn't have to. With the right guidance, you'll be ready to move forward with confidence when the time comes. We are here cheering you on every step of the way.