Mortgage prequalification versus preapproval
How much home can you afford?
When buying your first home, understanding how much money you may be able to borrow can ease the process. So how does this work? With both a prequalification and preapproval, a lender will take a preliminary glance at your financial information to help you understand how much home you may be able to afford. They have more similarities than differences:
- Neither one comes with any fees or obligations.
- Neither one is a commitment to lend.
- Both provide an estimate of how much you could borrow to buy a home.
- Both base that estimate on factors like your household income, your debt-to-income ratio, how much you have for a down payment, and your credit history.
A prequalification shows sellers you’re a serious buyer. Plus, you’ll get a better idea of your potential loan amount, interest rate, and monthly mortgage payment.
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Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A.
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