Prequalification is an early step in your homebuying journey. When you prequalify for a home loan, you’re getting an estimate of how much you might be able to borrow based on a credit check and your finances.

Prequalification is also a chance to learn about different mortgage options through your lender and find the right fit for your needs and goals.

Preapproval is as close as you get to confirming your creditworthiness without having a purchase contract. 

You complete a mortgage application, and your lender then verifies the information you provide. They’ll also perform a credit check. 

If you’re preapproved, you’ll receive a preapproval letter, which is an offer (but not a commitment) to lend you a specific amount, valid for 90 days.

Getting prequalified is helpful, especially for first-time buyers deciding their purchasing budget and knowing how much they can borrow.

Preapproval can be extremely valuable when making an offer on a house, especially in a competitive market where you need to stand out among other buyers. Remember, sellers, consider you a serious buyer when you have verified your finances and creditworthiness.