What is the difference between pre-qualification and pre-approval?
Written and reviewed by Andrew Ragusa, Licensed Real Estate Broker and Broker of Record, REMI Realty LLC — 11+ years of transactions across Long Island, Brooklyn and Queens.
The short answer
A pre-qualification is a preliminary estimate based on basic income questions. A pre-approval is more in-depth — the lender reviews your credit, tax returns, and financial documents to provide a stronger, more reliable evaluation.
A mortgage commitment means the buyer has been issued a commitment letter by the bank. That letter usually comes with conditions that still have to be completed, such as providing proof of homeowners insurance, addressing repairs required by the lender, or satisfying whatever else the bank needs buttoned up before closing.
Some buyers come with what their lender calls a pre-commitment letter instead of a basic preapproval. That generally means the buyer has already been through underwriting and approved based on their finances. The property still has to be approved by the lender, including meeting the appraisal and any remaining property-related requirements.
A commitment makes the financing stronger, but it is not a guarantee of closing. Any remaining lender conditions still have to be satisfied.