Generally speaking, many people use these terms interchangeably to mean the same thing: that you’re going to the bank BEFORE you get a loan to find out if you’re likely to get the loan after you find a home. But they don’t quite mean the same thing. Here’s how and why you should consider getting pre-approved or pre-qualified before making an appointment with a realtor to start viewing houses that are on the market.

shopping cart with house in it


Pre-qualification usually applies to home loans. This should be your first step in getting a mortgage because it tells you and your realtor how much of a loan you’re likely to be approved for. But, what IS it, really? A pre-qualification is a limited review of your finances including debt, income, and assets that gives you, the borrower, a clearer picture of what you can expect to receive in terms of an interest rate and other fees. This can be done with your lender in-person, over the phone, or online and once pre-qualified, you will receive a letter to present to realtors and sellers during your home search. Your home loan will still require a full underwriting approval once you have found the home you’d like to purchase.


A pre-approval is a more comprehensive review of your debt, income and assets than a pre-qualification. This is more involved since documents are given a preliminary review by underwriting. Once underwriting has given the green light for a pre-approval, you will receive a pre-approval letter to use during the home search process. However, once you have your purchase contract in place for the home you’d like to purchase, your loan will still need to receive full underwriting approval.

There’s nothing worse than finding your dream home and then finding out it’s just out of reach when it comes to the money you have available for down payment, or perhaps your approved loan limit. And, some sellers won’t even allow someone to look at the home they have put on the market if you don’t have a letter of pre-qualification or pre-approval.

Why? Because a pre-qualification/pre-approval is extremely helpful in streamlining the mortgage process. It can take hours off of the home shopping process. And those hours amount to money when it comes to a competitive buyer’s market like we’re experiencing in 2021. I have been helping my sister with searching for a home recently and have found that it’s not unusual to be doing a walk-thru in one home only to have it go under contract while you’re standing in it. This happened to us several times, and what saved us from going through dozens of homes was the fact that my sister was pre-qualified and knew exactly what type of home she was seeking.

Why do we, the bank, encourage pre-qualifications?

It’s all about you! Central National Bank Mortgage Loan Officers love to assist borrowers in getting pre-qualified since it makes the steps to complete the loan process much simpler when we’ve done some of the homework ahead of time. It also allows us to assist you, the buyer, in making educated decisions when it comes to purchases that could have a long-term effect on your finances. Once you have a loan be sure to keep an eye on the markets and rates. You might have the opportunity to refinance your loan at some point in the future and save some money on interest over time. This all depends on the economy and the trend of rates, but it’s important to remember that closing on a loan doesn’t mean you’ve hit the end of the road and don’t have to pay attention before you’ve paid it off.

If you’re still confused about the loan process, or need to get pre-qualified, give us a call or visit your local branch to be put in touch with a lending expert near you. Our team can help you navigate the whole process of getting a mortgage and take the stress out of trying to decide whether you’re using the right terminology. After all, that’s why we’re here.

Pre-approval vs Pre-qualification: What do I need?
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