Consumer Tips

Mortgage Prequalification vs. Preapproval

Wells Fargo Home Mortgage

March 19, 2021

A mortgage prequalification or preapproval can help you search for homes at prices where you are more likely to qualify for the home loan needed to complete the home purchase. Securing either also helps demonstrate to sellers that you have or are likely to get the financing you need in order to meet their asking price, which can be especially helpful in a competitive market, when multiple potential buyers may be trying to purchase the same home.

There are also some key differences. Let's look more closely at both.

Prequalification

A mortgage prequalification uses your basic financial information to provide an opinion of how much you may be able to borrow. There is no fee, no obligation, and no credit check involved.

It's helpful when: you're thinking about buying a home, but haven’t started looking at properties and aren’t ready to complete a mortgage application.

How to get one: Provide Wells Fargo Home Mortgage with basic information over the phone, in person or online. We’ll provide you with a home financing price range opinion on the spot.

Preapproval

A preapproval is more detailed and provides an estimate of your home price range based on an initial review of your application and limited credit information. With a preapproval, there may be a fee for the cost of the credit check.

It's helpful when: You’re actively looking at properties, want to focus your search, and are ready to fill out an application. Because it’s based on more detailed information and an actual credit check, a preapproval is often considered stronger than a prequalification. It will give you a more accurate idea of your potential loan amount, monthly payment, and interest rate, and it shows sellers you’re a serious buyer.

How to get one: Fill out a mortgage application. We’ll review the application and credit information and conduct an automated underwriting review. If you're approved, we can usually provide a home financing price range estimate or the loan amount you may qualify for right away.

Getting prequalified or preapproved can help you estimate your price range, however, it’s important to remember that neither one is a commitment to lend. A home mortgage consultant can help you decide which is better for your situation.

Wells Fargo is also here to help with a wide range of home financing options, online tools, including a simplified online mortgage application, and personalized start-to-finish support – so you can shop for a home with confidence.