Pre-qualified vs. pre approved
Getting pre-qualified is not the same as getting pre-approved. Pre-qualification is simply a review of your finances where pre-approval is based on your actual income, debt and credit history. Often lending institutions will pre-qualify you for a mortgage that is much more than you can realistically and comfortably afford. Many people make the mistake of basing their home-buying decisions on the pre-qualification rate and then end up being slaves to their mortgage payment, or worse yet, lose their home to foreclosure because they can’t afford the payments. Pre-approval will save you the time and grief of looking at houses you can’t afford and put you in a better position to make a serious offer when you do find the right house.
Many experts recommend that you apply for pre-approval early in the home buying process because it will give you a good launching point. Pre-approval helps you figure out where to start because it determines the size of the loan for which you qualify, and therefore the price range of homes you can begin to consider.
Pre-approval may also be a good idea because it gives you more credibility when the time comes to make an offer on a house; sellers are generally more willing to accept an offer when the buyer is pre-approved.
To get a pre-approval, you will need to visit a mortgage lender. You will need the same documents listed above, collect them and keep them in a folder for easy access when you apply for your actual mortgage. With this information, most mortgage lenders can guide you from there and give you pre-approval for a loan that suits your needs.