REAL ESTATE
Port Townsend, WA

View ALL listings
of real estate for sale in Port Townsend and Jefferson County.

Mortgage Pre-Approval and Pre-Qualification

When you get pre-approved for a mortgage loan, you are essentially finding out how much money a particular lender is willing to lend you. The word "particular" is a key part of that last sentence, because Lender 'A' might be willing to give you more or less money than Lender 'B.' They all have slightly different underwriting and approval guidelines.

Pre-approval goes a step further than pre-qualification, which is just a basic review of your finances. Through this process, a lender will review your finances in greater detail and will pre-approve you for a certain amount. Before we go any further let's define each of these similar-sounding terms:

• Pre-qualification - The process of determining how much a borrower (home buyer) can afford to borrow, based on a basic review of their finances. Gives you a general idea of what you can borrow. Generally does not require a formal mortgage application. Pre-qualification is non-binding, which means there is no guarantee you'll actually get approved for this amount.
• Pre-approval - Similar to the pre-qualification process described above, but based on a more in-depth review of the borrower's financial history. Gives you a more accurate idea of how much you can borrow. Generally requires a mortgage application. This process takes place before you have selected a home, which distinguishes it from the final approval described below. Pre-qualification is non-binding.

Being pre-approved for a home loan helps you in many ways. For one thing, it shows the sellers that you're capable of buying their home. This can give you a leg up during the offer process, especially when multiple buyers are competing for the house. When you've been pre-approved by a mortgage lender, it's the next best thing to having the money in hand.

Of course, the pre-approval is not a binding agreement, so you don't know for sure if you'll get final approval for that amount. But it gives you a pretty good idea of what to expect.

Have a question about real estate?

Let me help you. All my years of experience as a Realtor have given me a wealth of knowledge about selling and buying real estate. If I don't already have the answer to your question, I know just where to go to get it. Simply use this handy form.