The Difference between Prequalification and Pre-approval
When you get a mortgage prequalification, it is based solely on information you provide,without a detailed review of your income, assets, and credit history. Therefore, the prequalification amount is more of an estimate. It has not been underwritten against our credit guidelines for the mortgage program that will be used for financing.
When you obtain a mortgage pre-approval from Bank of England Mortgage, it means that we have underwritten your income, assets, and credit history to confirm you meet the credit requirements necessary for the terms of the mortgage you intend to use for financing.
Initial Mortgage Prequalification
Getting prequalified for a home loan is the first step in the mortgage process, and is generally pretty straightforward.
- First, we will evaluate your overall financial picture, including your debt-to-income ratio and assets, based on the information you provide.
- We will then give you an approximate idea of the loan amount for which you would qualify if all of the information you provided could be verified.
Mortgage prequalification can be done over the phone or online, and there is no cost involved. Mortgage prequalification does not include an analysis of your credit report or an in-depth look at your ability to purchase a home.
Mortgage Pre-approval: The Important Next Step
At this point, you can request a full mortgage pre-approval. A mortgage pre-approval is far more valuable than a prequalification because it means we are actually approving you for a specific loan amount, usually valid for a particular time period such as 90 days.
Getting a mortgage pre-approval means that you can be confident in your ability to obtain financing, although it is still subject to final loan approval and the appraised value of the property. Thus, securing a mortgage pre-approval before shopping for a home speeds up the underwriting and loan approval process, and allows you to go house-hunting with a good deal of certainty about what you can afford.
