What is the difference between pre-approval and pre-qualification? Why is it important to be pre-approved before the house hunt?

Imagine falling in love with your dream home only to learn you are not financially able to buy the home. Or, you may learn you could have chosen a home that better fits your financial picture. A pre-approval will allow you to go straight into the home search knowing exactly how much you can afford. 

In the sellers’ market we are currently in, it is extremely important to have all your ducks in a row before diving into the home search. First and foremost, you should find a trustworthy realtor in your area. If needed, realtors can direct you to a few lenders for you to choose from to begin your pre-approval process. 

To be pre-approved, you will speak to a lender and give important income documents, permission for the lender to pull your full credit report, and other financial information. Once you are officially pre-approved, the lender will provide a pre-approval letter to you and to your trusted realtor. This letter will show the monetary amount you are pre-approved for, the loan type, and all the loan terms you agree to. You will want the pre-approval letter to go with your offer to make it stronger, and more likely to be accepted by sellers.

The pre-qualification is based on your word to the lender in regards to your income, assets, and expenses. Nothing is given over to your lender for verification. It is not a promise to lend, and only gives you an idea of how much “house” you should be able to purchase based on what you have told your lender… if nothing has dramatically changed. It is assumed that you have enough to afford the new home. At this point the seller may be unwilling to accept an offer because you have been pre-qualified but not pre-approved.

Pre-approval is the most important step to making a successful bid. Another reason it is best to contact a lender before you search for a home is that your offer will stand out, particularly in multiple-offer situations. This strategy gives the seller security and tells them that you have gone the extra mile to do what it takes up front to purchase their home. 

If you are beginning your home search and looking for a lender or trustworthy realtor, contact us today at Rick Shaw Realtors!

We would be happy to suggest a few to get you started!

Lisa Robinson


cell: (502) 550-0635

office: (502) 245-0525


Rick Shaw Realtors

10222 Shelbyville Rd

Louisville, KY 40223




Rick Shaw Realtors
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