Lending Information

What is mortgage prequalification?

Prequalification is an early step in your homebuying journey. When you prequalify for a home loan, you’re getting an estimate of how much you might be able to borrow based on a credit check and your finances.

Prequalification is also a chance to learn about different mortgage options through your lender and find the right fit for your needs and goals.

What is mortgage preapproval?

Preapproval is as close as you get to confirming your creditworthiness without having a purchase contract. 

You complete a mortgage application, and your lender then verifies the information you provide. They’ll also perform a credit check. 

If you’re preapproved, you’ll receive a preapproval letter, which is an offer (but not a commitment) to lend you a specific amount, valid for 90 days.

PREQUALIFICATION VS. PRE-APPROVAL COMPARISON

PREQUALPREAPPROVAL
BenefitsYou can start house-hunting knowing how much you may borrowYou’ll be ready to make a confident offer — with competitive advantages
ProcessProvide your lender with basic information to quickly access a prequalification quotationAfter submitting documentation to your lender, you receive a decision within around 10 business days
DocumentationAnswer questions for this process, plus a credit checkProvide proof of financial details, plus a credit check

What information do I need to provide?

PREQUALPREAPPROVAL
Income informationCopies of pay stubs that show your most recent 30 days of income
Credit checkCredit check
Basic information about bank accountsBank account numbers or two most recent bank statements
The down payment amount and desired mortgage amountThe down payment amount and desired mortgage amount
No tax information requiredW-2 statements and signed, personal and business tax returns from the past two years

Which is right for me?

Getting prequalified is helpful, especially for first-time buyers deciding their purchasing budget and knowing how much they can borrow.

Preapproval can be extremely valuable when making an offer on a house, especially in a competitive market where you need to stand out among other buyers. Remember, sellers, consider you a serious buyer when you have verified your finances and creditworthiness.

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