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Getting prequalified or preapproved for a mortgage<\/a> can be two important steps when you want to buy a home. You\u2019ll find out approximately how much you can borrow, giving you a maximum budget for your purchase. And you can get a letter from the lender showing you\u2019ve been conditionally approved for a loan, which could be important when submitting an offer in a competitive market. You\u2019ll also better understand the range of interest rates<\/a> available to you.<\/p>\n Read on and we\u2019ll explain what these two similar sounding terms mean for prospective homebuyers.<\/p>\n Learn more:<\/strong> How to buy a house, a step by step guide<\/a>.\u00a0\u00a0\u00a0\u00a0<\/p>\n Understanding the differences between a mortgage prequalification and a preapproval can be confusing because some lenders don\u2019t use the terms in a consistent manner. But what\u2019s most important to remember is that there are two ways to get an estimate from a lender.\u00a0<\/p>\n We\u2019ll define a mortgage prequalification as the simpler process and the mortgage preapproval as the more complex one, as that aligns with what many lenders use.\u00a0<\/p>\n Some lenders make a distinction between the two by calling the more complex process a verified approval. However\u2014back to more potential confusion\u2014they might call the simpler process either a prequalification or a preapproval.\u00a0<\/p>\n Here are some things to be aware of when seeking a mortgage prequalification or preapproval, based on how we\u2019ve explained the terms above.\u00a0<\/p>\n\nPrequalification vs. preapproval: Key differences for homebuyers\u00a0<\/h2>\n
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