Mortgage Basics: Prequalification or Pre-Approval – What Do I Need?

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Should you complete a prequalification or a pre-approval? They're both valuable parts of the home buying and mortgage process. But your situation determines which you're ready for.

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Prequalification is the preliminary discussion about financing a mortgage.

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So if you're wondering if home-ownership is even right for you or you're unsure about your mortgage options, a prequalification might be the right way to start exploring your possibilities.

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A woman is observing a computer with properties displayed. A compass is shown and point to different homes, resembling the different renting options you will have.

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It can also be a helpful first step if you're starting a full-time job after finishing school or you aren't sure about your credit and price range.

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Pre-approval is more specific to the final purchase. But it's not a commitment to borrow or a commitment by the bank to lend.

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You might want to start the pre-approval process if you're shopping for homes, have a real estate agent, or if you've already defined your price range.

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A man and a woman stand next to a house with a “FOR SALE” sign.

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If you're ready, a potential lender will evaluate all of your financial information and help you determine the mortgage program for a particular home, or a price range if you're deciding between a few.

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Sheets of paper appear with dollar signs and text. A man and a woman shake hands. Three homes appear in circles above the hands.

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A pre-approval usually lasts around 90 days. So it's good to get pre-approved when you've made up your mind about buying a home, so prequalification or pre-approval.

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A calendar flips through the pages. A family and dog appear next to a home.

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