Knowing the difference between being pre-qualified and pre-approved can help you better understand how to become a better and more efficient buyer, ultimately putting you in the best position to make the winning offer when you find your dream home.
What is Mortgage Pre-Qualification?
Pre-qualification is the initial step in the mortgage process, and it’s generally fairly simple. You supply a bank or lender with your overall financial picture, including your debt, income and assets. After evaluating this information, a lender can give you an idea of the mortgage amount for which you qualify. However, loan pre-qualification does not include an analysis of your credit report or an in-depth look at your ability to purchase a home. In other words, a prequalification is not a sure thing and it doesn’t carry the same weight as a pre-approved buyer.
What is Mortgage Pre-Approval?
A pre-approval is a request for a loan to buy or build a home that is a comprehensive, underwritten review of the creditworthiness (income, assets, debts and credit) of your application. Based on this information, Park Bank issues a written commitment to you that is valid for a designated period of time. Obviously, this puts you at an advantage when dealing with a potential seller, as he or she will know you’re one step closer to obtaining an actual mortgage. Also, getting pre-approved for a mortgage enables you to move quickly when you find the perfect home.*
Pre-Qualification vs.Pre-Approval: Key Differences
| Feature | Pre-Qualification | Pre-Approval |
|---|
| What's reviewed | Basic overview of income, debts, and assets | Comprehensive, underwritten review including income, assets. debts, and credit. |
| Credit Report | Not analyzed | Reviewed as part of underwriting |
| Reliability to sellers | Lower (just an estimate) | Higher (written commitment from Park Bank) |
| Strength in competitive markets | Good, early guide | Significant advantage when making an offer |
Why Pre-Approval Matters in Today's Market
When housing inventory is tight and demand is strong, sellers often prefer buyers who have already completed a thorough financial review. Park Bank’s pre-approval gives you:
- A verified financial position,
- A written lending commitment, and
- The ability to move quickly when a home becomes available.
These benefits may give you a stronger edge than buyers who are only pre-qualified.
Getting Pre-Approved at Park Bank
Park Bank mortgage advisors are experienced in helping you get navigate the pre-approval process. They thoroughly review your financial information to help give you the buying power needed to land your dream home. As a community bank, Park Bank also makes local lending decisions as opposed to other banks that may not do their underwriting locally.
Reach out to our mortgage team for more information on the pre-approval process or if you’re ready to apply for a mortgage loan.
*Subject to credit approval
Trent Sveom, Senior Vice President Residential & Retail Lending, NMLS 709664