Pre-Qualified vs Pre-Approved | Financing for Home Buyers

What does this mean and will I need to do either?

Pre-qualification or Pre-approval are the sellers assurances that the buyer has the capacity to execute any contract they enter and will more than likely complete the transaction. It also allows your real estate agent to know that you are a qualified buyer, and what price homes to be searching out for you. In this market sellers require Pre-approved or at least Pre-qualified offers, before they will even consider them.

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Basically means you have been asked by a lender, a series of questions concerning your employment history, income and debt status and other financial considerations, like savings accounts, etc. Based on the answers to these questions the lender will compute your debt to income ratios and determine what price loan you will be able to qualify for.



Means you have done the above plus you have paid for the credit report and submitted pay stubs, W2’s and bank statements to your lender, to have your credit, income and employment verified. Getting pre-approved can be done relatively quickly, ranging in time from a few hours to a day or two, depending on circumstances. Your lender will then issue a letter or certificate to your agent, that he/she in turn presents to the seller at the time of the offer, displaying that you are an approved buyer. What this tells the seller is that you are not a financial risk to buy this house. What this means to you is that it puts you in a better or stronger negotiating position.


Always opt for Pre-Approval

You will be required to do this within a specific number of days after your offer is accepted. Therefore, it’s in your best interest to do it before you make an offer, putting you in a stronger position of acceptance or negotiating.


It is important for you to know and understand, that most sellers, consider Pre-qualification of no real value and will only accept Pre-approved offers.


Double offers or multiple offers are not uncommon in real estate transactions in this market. Sometimes sellers have more than one offer to consider at the same time. Price is not always the deciding factor.


If? you offer as an example, $2,000 less than another party and you are approved and they are not, the seller could easily decide to go with you, the sure thing, as opposed to the other offer that is just a probable or maybe. Or another example might be; two offers are made at one time and the price offered is the same but you are pre-approved and the other buyers are just pre-qualified. Your offer would probably be accepted over the other buyer.