Why agents care
Pre-qualification estimates help agents and buyers start a search at the right price range. They're also an easy first step to offer new leads before asking them to commit to a lender.
Glossary term
Pre-qualification
Pre-qualification is an early, informal estimate of a buyer's borrowing capacity, based on income, debts and assets the buyer reports, usually without verification. It's useful for planning a search but carries little weight with sellers compared with a pre-approval.
Example
Example: a buyer reporting $96,000 income and $600 in monthly debts gets an estimated price range around $350,000 to $400,000, depending on rate, taxes and down payment.
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Questions by topic
Pre-qualification: common questions
Is a pre-qualification enough to make an offer?
Sellers usually expect a pre-approval letter. A pre-qualification is for planning.
Does pre-qualification affect credit?
Usually not, because it's often done without a hard credit inquiry. It depends on the lender's process.
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