Understanding the Differences between Mortgage Prequalification and Preapproval

Do you plan to buy a home in Morris County’s Mendham Borough, Madison, Montville, or Mine Hill? If yes, once you’re ready to apply for a mortgage, you’ll come to know of terms such as “prequalification” and “preapproval.” For you as a potential home buyer, it’s vital to understand what these terms mean and how different they are from each other. Whether you plan to buy from someone who’s ready to ‘sell my house in NJ’ or a cash buying company that says “we buy houses in NJ”, knowing what mortgage prequalification and preapproval are is important. Having this clarity would guide your home search in Mendham Borough, Madison, Montville, or Mine Hill, and let you focus better on properties you can afford. And when the time comes, such knowledge would also help you decide the amount you should offer to prove to the seller that you’re a serious buyer.

Mortgage prequalification vs. preapproval – the definition

Prequalification is the first step in your home buying journey. It would typically take 1 to 3 days to receive your prequalification letter. Mortgage prequalification involves supplying the lender or bank with all your financial information, including the details of your assets, debt, and income. The lender will also let you know about different mortgage options and ask you what you’re anticipating to get out of your mortgage. Next, the lender will assess your financial information to arrive at a ballpark figure, which would be the amount of money that you might receive.

It’s important to note that the actual amount of money you obtain for the loan may not be the amount you’re prequalified for. That’s because your lender won’t check your credit reports or conduct an in-depth digging during the prequalification process, but these would be done during the mortgage preapproval process.

Mortgage preapproval is the next step after you’re prequalified for a mortgage loan. It’s as close as you can get to validate your creditworthiness even when you don’t have a purchase contract in place. It could typically take about a week to get preapproval after you’ve applied for it.

Compared to prequalification, preapproval is much more detailed. Before you go on house hunting and plan to buy a property from a company that says ‘we buy houses in NJ for cash and sell them fast’, you need to know what prequalification is and how to get it.

For it, you must fill out an official mortgage application. When submitting this application, you’ll also need to provide your lender with extensive documentation required for the financial background and credit checks, such as your pay stubs, W-2, tax returns, and bank statements.

Your lender will review and assess this information to tell you the amount of money that you’ve been preapproved for. The lender will also discuss interest rates and could even lock in a rate right away. However, you should remember that the amount of money you’re preapproved for doesn’t guarantee you’ll get the same amount as your loan.

Points of difference between mortgage prequalification and preapproval

  • Credit history check: Prequalification doesn’t need it while preapproval does.
  • Mortgage application: You don’t need to fill it out for prequalification but must do it for preapproval.
  • Financial review: Prequalification doesn’t involve reviewing your finances while preapproval does.
  • Application fee: You don’t need to pay an application fee for prequalification but might need to shell it out for preapproval.
  • Down payment estimate: Prequalification doesn’t need an estimate of the down payment, unlike preapproval.
  • The amount of money you can borrow: Prequalification gives you an estimate of the amount of money you can borrow while preapproval gives you a specific amount that you can borrow.
  • Loan interest rate: When you prequalify, you won’t get information related to your loan interest rate but you’ll get it when you’re preapproved.

You should keep these differences in mind when planning to buy a home either from a direct seller who’s ready to ‘sell my house in NJ’ or a cash buying company that promises ‘we buy houses in NJ and sell them fast’.


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Extremely pleasant, attentive to all my needs always. It was a pleasure renting an apartment from Ken.
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Can't say enough about Ken and his team. This was the most seamless sale I made. I didn't have to deal with all the... nonsense that comes with selling your home. They bought my house as is, I didn't have to declutter and pay a broker commission. All in all great experience, will do business again.read more
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Selling my property too Ken was the best thing I did. Although I was skeptical at first I soon found out how... professional he was. Even though my closing contract was not standard because of the pendemic situation. He followed through on time with all the contract terms as promised. Thank you Ken for your professionalism.Alfredo Gread more
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23:27 19 May 21
Ken was referred to us by someone who had sold their home thru Ken last year. From the first meeting to the last... transaction, Ken and his team were professional, efficient, easy to work with, and above all.... caring. Each seller's situation is different, and Ken truly understands that. We were treated with respect each time.Since we were in a time crunch situation, selling our home with a cash offer from Ken was the best decision we could have made. We were perfectly okay with getting slightly less money for our home as compared to selling it via an agent. But if you consider the money saved on agent commissions (both buyers and sellers), closing costs, repair costs, attorney fees, and most important of all... time and headache, you can't beat the option to sell your home with a guaranteed cash offer from a reputable buyer like Ken.My wife and I were very pleased with our experience with Ken. If you are in the market to sell your home fast for a cash offer, I highly recommend giving Ken a call!Best of luck!Vishread more
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14:19 10 Mar 21
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I am a travel nurse and stayed in a town home for 3 months... It was exactly as described and any issue that came about... was handled within a few hours - I would definitely recommend and I would definitely stay again!read more
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12:41 14 Aug 20
Amazing experience! Ken was upfront, quick and got the deal done in no time. Having done a number of real estate... transactions this was by far the easiest and smoothest. I would unconditionally recommend him to anyone looking for an easy, quick and fair transaction.read more
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19:10 26 Mar 20
Ken is a very professional individual from start to finish. As promised, he gave me a fair deal on my one of my... properties that was in rough shape. He was knowledgeable and responsive to my requests and as promised we didn't need to waste time with inspections and appraisals and we closed quickly. He made it painless as possible by having his crew handle the clean up. This was truly a quick and easy process but a professional individual. Thanks Ken!read more
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