The real estate market can be competitive. It’s not uncommon to see multiple offers on a home. One way to make yourself stand out from the crowd is to submit a prequalification or preapproval* with your offer. While they may sound the same, it’s important to understand the difference so you can make the best offer possible.
Prequalification is an estimate of how much money a lender thinks you could secure. This is often a free assessment and the loan amount is based on what you have disclosed to the lender either verbally or with limited financial documents. While a prequalification may not give you the strongest offer on a home, it’s a good jumping off point to see how much of a home you can afford while you’re shopping.
Preapproval is a more firm estimate from the lender. The loan amount is based on a credit report and review of financial documentation. Most likely your file has not been submitted to underwriting for full approval. Typically, when making an offer on a home, a preapproval from a lender will carry more weight than a prequalification.
It’s important to remember, that both a prequalification and preapproval do not constitute a guarantee of financing from the lender. Because your loan is not cleared through underwriting, it’s still possible to experience setbacks such as underwriting conditions. Underwriting conditions are items the underwriter wants to explain or document as part of the loan approval. If the condition is complex or takes a while to resolve, it may take longer to move forward with closing.
If you’ve found your dream home and you want to make sure you’re the best offer on the table, check out our Security Plus Seller Guarantee®**. With this program, we preapprove you with a fully underwritten loan amount and backed with a guarantee (for qualified buyers). It’s a guaranteed financing commitment that powers up your purchase power and often shortens your closing time. Contact one of our home loan experts to get yours today!
* Preapproval is not a commitment to lend and is subject to satisfactory loan conditions including a completed application and property appraisal. Other terms and restrictions apply. Not all products available.
**Applies to purchase loans only. To qualify, buyer’s Security Plus Approval/Seller Guarantee Addendum must have been issued by Evergreen and the Seller shall have executed the addendum with their signature. Certain loan types do not qualify for this offer. Restrictions apply.