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If you’ve been researching a potential home purchase, then you’ve probably seen the terms pre-approval and prequalification thrown around. Though they might sound alike, they’re typically two different and important steps in the homebuying process.
Here’s how a prequalification differs from a pre-approval:
- Mortgage prequalification
- Mortgage pre-approval
- How long a prequalification and a pre-approval take
- Requirements for a prequalification and pre-approval
- How to get prequalified and pre-approved
Mortgage prequalification
A mortgage prequalification is basically a rough estimate of how much mortgage you can qualify for, based on the information you provided the lender. It’s a good first step toward buying a home, as it gives you a general idea of what you might be able to afford.
If you’re not happy with the ballpark number you get prequalified for (or you’re turned down), you might want to step back, work on your credit score, or save up more cash before moving forward.
Mortgage pre-approval
A mortgage pre-approval comes with a full application and more verification. Instead of just taking your word for it, the lender will actually verify your credit score and other personal information. If it checks out, they’ll tell you how big a loan you can expect to be approved for.
They’ll also give you a letter confirming this amount, which you can then submit with any offers you make. Since pre-approval letters mean you’re one step closer to an approved loan, they can often help you stand out from other buyers, especially in a bidding war.
Credible makes it easy to get a pre-approval letter. Our process is entirely online and can be completed in just three minutes. Check out the table below to see how our process differs from that of traditional lenders.
| Traditional lenders | Credible | |
| How long does it take? | 1 to 3 days | 3 minutes |
| Credit check | Hard credit pull (negative impact on your credit) | Soft credit pull (no impact on your credit) |
| Online process | Typically minimal; instead processed via in-person visit at a branch or phone call with a licensed loan officer | 100% online |
| Compare multiple lenders? | No, visit multiple lenders to receive multiple pre-approval letters | Yes, pre-approved across multiple lenders at once |
| Multiple pre-approval letters to make additional property offers? | No, must submit another request to lender for new pre-approval letter | Yes, generate additional letters instantly with a customized loan amount |
Ready to get pre-approved through Credible? |
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Learn More: How to Get a Streamlined Pre-Approval Letter With Credible
How long a prequalification and a pre-approval take
Since a prequalification requires only a few pieces of information, it’s the fastest option. If you opt for a lender with an online prequalification form, it typically takes just a minute or two to complete.
Pre-approvals, on the other hand, take a bit longer since the lender needs a more comprehensive look at your finances. You might also need to provide documentation of your income, assets, and other financial data.
Check mortgage rates: Generally, prequalification is best before you begin the home shopping process. You’ll use a lender’s prequalification form to gauge whether it’s a good time (financially) for you to buy a home and how much you might be able to afford. A pre-approval is best reserved for serious homebuyers. If you’ve done your research, prepped your finances, and you’re ready to start shopping for homes, you’ll want a pre-approval in hand to help guide you. It can point you toward appropriately priced homes and give you a leg up over the competition (which is important if you’re in a hot market). Learn More: How to Know If You Should Buy a House Here’s a look at how the process generally works for a homebuyer: After that, you’ll find a house, submit an offer, and move forward with the purchase. Your lender might need additional documentation along the way, so stay in touch with your loan officer and respond quickly to prevent delays. Credible simplifies the pre-approval process. We’ll securely gather your information and you can see if you qualify for an instant streamlined pre-approval letter in just three minutes. We allow you to adjust your down payment and figure out how much home you can afford by simply adjusting a slider.Requirements for a prequalification and pre-approval
Prequalification Pre-approval
Requirements
Benefits
Process
Fill out a short online form or have a short phone call/meeting with a loan officerFill out a longer application, agree to a credit check, and provide required documentation to lender.
Documentation None
When to do it When you’re curious if buying a house is possible given your finances or you just want a rough idea of what you may be able to afford. When you’re ready to actively start searching for a house and you know your finances are ready.
How to get prequalified and pre-approved
