Understanding Mortgage Pre-Approval and Pre-Qualification

mortgage pre-approval pre-qualification
Oct 23, 2019 03:12 PM

By: Primary Residential Mortgage, Inc.

There are several steps involved with any mortgage process, ranging from application to approval and, eventually, closing on a home. But there are also several tools that might be available to you to help expedite certain parts of this process, and two important such tools are known as pre-approval and pre-qualification.

At Primary Residential Mortgage, we’re happy to detail pre-approval and pre-qualification methods available for any of our wide range of mortgage loan options. While some people confuse these two terms or think of them as the same thing, they are very different and help you achieve a variety of objectives. Let’s look at both, plus other ways you can prepare yourself for a seamless mortgage process.


Pre-qualification is the much less official of the two we’re looking at here, a way of viewing a basic snapshot of your financial situation and the kinds of loans you might be able to qualify for. A pre-qualification is usually looking at your debt-to-income ratio and whether this number is appropriate for various loan types, plus gives you a broad estimate of how much you might be able to borrow.

It’s important to note, however, that there is no commitment being made between you and a lender during pre-qualification. While you may include basic financial information like your  monthly debts, expected down payment and even the purchase price of a potential home, there is nothing binding about anything on either end. The information you receive during pre-qualification can be extremely helpful as a guide moving forward, but it does not mean you have been approved for anything.


Pre-approval, on the other hand, is a far more official process. It’s very similar to an actual mortgage application in most cases, involving detailed financial information and assets disclosed to a lender. After reviewing your information, the lender will give you a report indicating how much you qualify to borrow based on your credit and financial history.

Pre-approval includes a deep look at your credit score, unlike pre-approval. Lenders will also look at your outstanding debt, length of credit history, type of credit and several other factors. In most cases, a pre-approval letter from a lender serves as an excellent bit of buying power as you enter the home market.

Preparing for Either

Some general tips to put yourself in the best position before any mortgage:

  • Save up: You generally need a down payment to secure a loan, a minimum of 3.5 percent and often more. Spend years in advance saving up toward this amount.
  • Credit score: Not only should you obtain your credit score, you should learn what’s affecting it and how you might be able to raise it in the short-term before applying for a mortgage.
  • Debt: How much debt you carry plays a big role in the kind of loan you can obtain, so try to pay off as much as possible before applying.

For more on pre-qualification and pre-approval, or to learn about any of our mortgage loan programs or services, speak to the staff at Primary Residential Mortgage today.

*PRMI NMLS 3094. PRMI is an Equal Housing Lender. Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. Programs, rates, terms, and conditions are subject to change and are subject to borrower(s) qualification. This is not a commitment to lend. Opinions expressed are solely my own and do not express the views of my employer.

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