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Why You Should Get Pre-Qualified & Pre-Approved Before Buying A Home

There are a lot of things you should do before getting your first mortgage. A lot of them involve your finances—checking your credit score, fixing errors on your credit report, building up your savings.

These are things most novice homebuyers already know.

But there's one important step that many first-time borrowers might overlook, and that's to get pre-qualified or pre-approved.

What's the Difference?

A lot of people use these two terms interchangeably, but there are important differences between being pre-qualified and pre-approved.

With pre-qualification, the process is faster but also less accurate. It will give you a very general idea of what your mortgage loan might be, but a lot can change because none of the information will be verified. You'll simply be self-reporting your:

  • Income

  • Any other assets

  • Debts

One potential benefit to pre-qualification, however, is that your lender will not pull your credit. If you aren't sure you're totally ready to buy a house right at this moment, a hard pull on your credit can lower your credit score and potentially cause problems when you are ready.

However, if you're really serious about buying a house, getting a pre-approval is more involved, but it will give you a much closer estimate of what your actual loan might look like. During pre-approval, you will need to:

  • Authorize the lender to pull your credit report

  • Fill out a mortgage application

  • Provide your pay stubs for the past 30 days

  • Gather your W2 forms for the past 2 years

  • Submit tax returns for the last 2–3 years

  • Print out your bank statements from the last 60 days

  • Send a copy of your driver's license

In turn, you will get a letter that lists a more formal estimation of how much your loan will be for plus the interest rate you could get.

One of the benefits of a pre-approval over a pre-qualification is that it shows sellers and real estate agents that a lender has looked at your finances and would be willing to lend to you. Put another way, it shows that you're capable of getting financing to actually buy the home. Having sellers and agents know you're a serious buyer can make your search for a home easier.

Compare Offers from Different Lenders

Just like a lender can't actually guarantee anything until closing, getting pre-approved or pre-qualified isn't a commitment that you'll actually get a home loan or even use that lender.

In fact, with a pre-approval especially, it can be a great starting place to compare offers from different lenders to make sure you're getting the best deal. By looking at the different interest rates and loan amounts in each pre-approval, you can easily see which lender you might want to go with.

Research has found that contacting multiple lenders could save you thousands of dollars in lifetime interest on your mortgage. But a 2015 study by the Consumer Financial Protection Bureau (CFPB) found that 77% percent of people only applied with one lender. That's 77% of people potentially missing out on thousands of dollars saved.

Though there are many reasons why borrowers don't shop around, one suggested hypothesis is that they simply wait to long to start it, and when they do, they're already overwhelmed. That's why getting multiple pre-approval letters from different lenders can be so beneficial. It allows you to start the comparison process at the beginning, before you're too overwhelmed to do it.

Finding the Right Lender

If you have any more questions about getting pre-qualified or pre-approved,'s featured lender, Low VA Rates, can help you out.

As a leading lender for VA loans, they have over 10 years of experience helping tens of thousands of veterans and servicemembers just like you get the home of their dreams. So, when you're ready to get pre-qualified or pre-approved, make sure you include them as one of the lenders you want to compare.