The homebuying process can feel like navigating through a maze of mortgage terms. To make it easier, let’s demystify three common terms: Pre-Qualification, Pre-Approval, and Rate hold.

What is Pre-Qualification?

This initial and optional step provides a quick overview of your financial situation. It’s suitable for individuals who want to explore their options or are curious about their affordability. Pre-qualification doesn’t require a credit report and offers an estimated mortgage amount you could potentially be approved for.

What is Pre-Approval?

An essential step for serious buyers (and borrowers) and a more comprehensive process that delves into your financial standing. It is required in order to approach a lender, secure a Rate hold and is strongly recommended for those looking to purchase property within the next 4 months. Getting pre-approved helps determine the type of home you can afford and manageable mortgage payments. This step requires specific documentation and a thorough financial assessment.

What is a Rate hold?

Once pre-approved, some lenders offer Rate holds, locking in a specific mortgage rate for a set period of 90 to 120 days. This protects you from rate increases during the Rate hold period while enabling you to access lower rates if they become available. It provides peace of mind while searching for your ideal home.

Pre-qualification estimates your budget, while Pre-approval enables you to secure a Rate hold, empowering you with more bargaining power when buying (or refinancing) a home. Remember, Pre-qualification is different from Pre-approval, as the former is a quick assessment, while the latter involves a detailed documentation review and is required to be approved for financing.

Get Pre-approved ➤

If you need guidance during any stage of your home financing process, don’t hesitate to reach out. I’m here to assist you throughout your journey to finding your perfect home!


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