Prequalification and preapproval are terms you hear during the home buying process. They sound similar but they are not quite the same. Both are a type of proof for real estate agents and home sellers that demonstrate you may qualify for a mortgage to buy a home.
Mortgage prequalification vs. preapproval
Prequalification is a based on financial information which the lender does not verify. For example, your lender is likely to ask you what your annual income is but won’t ask you for W2s or other documents to prove it.
Preapproval requires you to provide documents that verify financial information like your income. This is a less simple process but it results in a mortgage amount which real estate agents and home sellers are more likely to trust.
How do you prequalify for a mortgage?
When you want to prequalify for a mortgage, you should expect to provide the following types of information:
- Credit score
- Assets and investments
If you are seeking preapproval, you may need to provide pay stubs, employment history, tax returns, credit history, outstanding bills, bank statements, and other financial documents.
What’s the primary benefit of being prequalified for a mortgage?
Getting prequalified for a mortgage will help you determine the price range of homes you can afford. It can also give real estate agents and home sellers confidence you can afford to buy a home. Getting pre-approved can give agents and sellers even more confidence you can afford to buy a home because it is based on verified financial information. Getting preapproved also helps you collect the documents you will need when you complete your mortgage application.
Does getting prequalified for a mortgage hurt your credit score?
Prequalification typically doesn’t affect your credit score because it involves a “soft” credit pull. On the other hand, preapproval usually requires a “hard” credit pull and may affect your credit score if you try to get pre-approved by several lenders.
If you’re considering more than one lender, try to request your home loan pre-approvals around the same time since credit bureaus typically count these separate requests as one single credit check.
When should I get prequalified for a mortgage?
Consider getting prequalified for a mortgage no more than 6 months before you start looking for a home, so it is based on your current financial status. Think about getting pre-approved for a mortgage a month or two before you make an offer on a house, so it based on more recent interest rates.
How long does a preapproval for a mortgage last?
Preapprovals on a mortgage can last between 60 and 90 days before they expire. One reason pre-approvals expire is because they are based on current interest rates and interest rates can change! At Freedom Mortgage, our preapprovals typically last for 90 days.
Talk to Freedom Mortgage today
Freedom Mortgage can help you get prequalified or preapproved to buy a home. We can also help you buy homes with conventional, VA, FHA, and USDA loans. Would you like to learn more about your mortgage options? Call 877-220-5533 to speak to a Freedom Mortgage Loan Advisor or visit our Get Started page.