What Does Prequalified Mean?

Prequalification is an initial step in the mortgage process where a lender evaluates your financial situation to determine if you are likely to qualify for a loan. This process typically involves sharing basic information such as your annual income, monthly housing payment, and savings. The lender may perform a soft credit inquiry, which does not impact your credit score.

Once prequalified, you can choose to proceed with a formal application, which involves a more thorough review of your financial documents and a hard credit inquiry. While prequalification does not guarantee approval, it is a useful step to gauge your eligibility without affecting your credit score.

What Does Preapproved Mean?

Preapproval is a more detailed process where the lender conducts an in-depth review of your financial situation, including tax returns, proof of income, and bank statements. This process often involves a hard credit inquiry, which can impact your credit score.

Receiving a preapproval letter indicates that the lender is willing to offer you a loan based on the information provided. However, it is not a guarantee of final approval, as the lender will still need to verify all details before issuing the loan.

Prequalified vs. Preapproved

While both prequalification and preapproval are steps in the mortgage process, they serve different purposes and involve varying levels of scrutiny. Here’s a comparison:

• Prequalification: Involves a soft credit inquiry, basic financial information, and provides an initial assessment of your eligibility.
• Preapproval: Involves a hard credit inquiry, detailed financial review, and provides a more accurate assessment of your eligibility.

Neither prequalification nor preapproval guarantees final loan approval, but preapproval is generally a stronger indicator of your likelihood to secure a loan.

Impact on Credit Score

Prequalification typically involves a soft credit inquiry, which does not affect your credit score. Preapproval, on the other hand, involves a hard credit inquiry, which can temporarily lower your credit score. However, if you are rate shopping for a mortgage within a short period (usually 14 to 45 days), multiple hard inquiries are often treated as a single inquiry, minimizing the impact on your credit score.

Opting Out of Credit Offers

If you wish to stop receiving prescreened credit or loan offers, you can opt out for five years or permanently by calling 888-567-8688 or visiting OptOutPrescreen.com. Note that it may take up to 65 days for the offers to stop.

Contact O1ne Mortgage for Expert Mortgage Services

At O1ne Mortgage, we are dedicated to helping you navigate the mortgage process with ease. Whether you are looking to get prequalified or preapproved, our team of experts is here to assist you every step of the way. Contact us today at 213-732-3074 for all your mortgage service needs.