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House Hunting: Prequalified vs. Preapproved and Why It Matters

Similar or Completely Different?

They’re terms that are often used synonymously among homebuyers, but are preapproval and prequalification really the same? The answer is a clear and definite no, and if you are looking to land your dream homes, the differences are vast enough to make all the difference in the world when you’re ready to put in an offer.

Think of it this way: prequalification is to preapproval is like a synopsis is to an entire novel. It’s just the tip of the iceberg, and it’s regarded as such in many ways.

When a homebuyer gets prequalified for a mortgage, they speak with a loan officer and have their credit looked over quickly. There might be some checking of income and assets, but there is no in-depth review process performed. It’s basically a quick determination to see if there are any glaring credit problems that might prevent a homebuyer from receiving a mortgage. In just a few minutes, a potential homebuyer can receive a prequalification letter to show his or her real estate agent so that they can look at homes or put in an offer on one, if their dream home should hit the market.

What’s Lurking Beneath That Prequalification?

Not so fast— that’s not the entire story. Of course prequalification sounds great: it’s a cinch to complete and gives buyers the confidence of presenting an offer since they’ve been vetted by the lender. But is it really all it’s cracked up to be? While prequalification is certainly a step in the right direction, should homebuyers take it a step further?

For some homebuyers, prequalification isn’t as reliable as it should be. There is a lot of consideration that goes into a mortgage, and digging deeper than a quick scan of a credit report is sometimes required to get an accurate feel of one’s creditworthiness. Small problems with income verification or existing credit accounts should be addressed before a potential homebuyer places a bid on a home—not after, and in many cases, these problems don’t arise until a lender takes a deeper look into the borrower’s credit, income or assets. In fact, due to the fact that prequalification is less thorough than preapproval, you may run the risk of being kicked to the side if a seller has two potential buyers and only one is armed with a true preapproval. Why take the risk?

Sometimes buyers with prequalification letters may run into issues with financing once their mortgage applications are turned in. This is primarily due to the very incomprehensive nature of prequalification, which can be avoided with a preapproval. Problems with income, less-than-obvious issues with a credit report or other financial concerns may arise when a full mortgage application is submitted and processed. So what’s the solution?

Preapproval: Prequalification’s Older, Wiser Brother

So, what is preapproval, then? Simply put, preapproval is an extensive, somewhat rigorous prequalification that delves much deeper than the most superficial layers of the mortgage application process. To get a true preapproval, you’ll need to submit certain documents to your lender that will really solidify your readiness to purchase a home. These documents will includ things like pay stubs, bank statements and tax returns, among other things. Of course, your credit report will also be reviewed in detail.

The process of preapproval is more intensive than that of a simple prequalification, so it does take a bit more time to process—but in many cases, homebuyers can have a true preapproval letter in-hand in just a few business days. It may take a little more time, but the confidence you’ll get from having a verified preapproval is truly priceless. You will also come out ahead because you will have already considered which loan type would be right for you with your personal mortgage advisor, leaving you in a great position to move forward with your purchase quickly-something that sellers will likely view as an attractive aspect of your offer.


Like any official document, preapproval letters do come with expiration dates: in most cases, 45 days. Prequalification letters can see an expiration date of up to twice as long, but even with that in mind, a preapproval letter is still your best bet when it comes to buying a new home. Don’t let the expiration dates hurry your decision, though: you can always resubmit your preapproval paperwork if you haven’t found the perfect house in six weeks. In some cases, it’ll just need to be updated to reflect the most recent transactions.

Aside from a faster expiration period, there is no downside to obtaining a preapproval versus a prequalification. They’re looked more favorably upon by real estate agents, are more reliable and will likely save you hassles in the future, so show sellers that you’re serious about your offer by getting preapproved instead of just prequalified.

To learn more about what it takes to get preapproved to buy a home, call NLC Loans at 1-877-480-8050 or contact us online. Let your personal mortgage advisor know that you’d like to be fully preapproved—not just prequalified.