Buying a home can be both exciting and nerve-wracking, especially when desirable houses are selling quickly. People often use the terms "getting pre-qualified" and "getting pre-approved" interchangeably, but they have very different meanings. Understanding pre-qualified vs. pre-approved can show a seller how committed you are to buying their home.
Getting pre-qualified is an initial step in purchasing a home. When you pre-qualify for a home loan, you’re getting an estimate of what you might be able to borrow, based on information you provide the lender. During this process, you have the opportunity to learn about the different loan programs available, determine what you can afford to purchase based on your stated income and monthly obligations, assets for down payment, your employment and credit history.
You will also receive a closing cost estimate to show you the liquid assets necessary to close a loan. Lastly, a “pre-qualification” letter can be provided which states all the information presented must still be verified. This step helps you see if you're ready to buy a home or if you need to set financial goals to make it happen.
Getting pre-approved shows your realtor and the seller that you are a serious buyer prepared to make an offer on a home. Getting pre-approved means you have filled out a mortgage application and all supporting documents have been reviewed and verified with regards to your employment, income, credit, assets and liabilities.
You will receive an approval letter (typically good for 90 days). Once you make an offer and the seller accepts, the only thing left to do is to have the house appraised. Since you will know all the closing costs up front, there shouldn’t be any surprises, and you’ll be on your way to being a home-owner.
Learn more about Capitol Federal’s processes on getting pre-qualified or pre-approved. Contact one of our loan professionals to start the home-buyer process.