From Due Diligence LLC:



In the US, most people buy homes through mortgage loans, and as of the fourth quarter of 2022, the country’s residential mortgage debt reached $11.92 trillion. In the current market, where home prices and interest rates are soaring, securing a mortgage loan can be challenging. Two key steps in the process are mortgage pre-approval and pre-qualification, and while these terms are often used interchangeably, there are important differences. Pre-qualification involves less information and is quicker, while pre-approval provides a more accurate estimate of the loan amount and takes longer. It also involves a hard credit inquiry and may include application fees. Getting pre-approved is essential in a competitive housing market, and it gives sellers assurance of your ability to get a mortgage. To get pre-approved, one must assess their finances, contact mortgage lenders, and submit necessary documents. However, it’s important not to get pre-approved too early in the home-buying process, as the letter has a limited validity period and the application may come with a cost. Ultimately, getting pre-approved makes you a more attractive home buyer to sellers and gives you a clearer picture of your borrowing capacity.



Original: Mortgage Pre-Approval vs. Pre-Qualification – What’s the Difference?