Becoming pre-approved for the purchase of a home is essential if you want to spend your time wisely. If you’re pre-approved for a mortgage loan, then you know exactly what price home you can buy. Pre-approval is different than pre-qualifying and the difference is important. Pre-approval means a buyer has gone through the credit and full verification process of a mortgage lender, and the lender is ready to write the check. A pre-approval is a lender's firm commitment on a loan. This lets you to enter into negotiations with the seller with confidence. Pre-qualify simply means that certain financial data has been provided to a lender and based on the information provided, a buyer should be able to afford a home in a determined price range, but nothing has been verified as to the true credit-worthiness of the buyer. A pre-approved buyer is gold to a home seller. It’s the best position a buyer can be in when negotiating a home purchase.

Pre-Approved

Before you can effectively contract for a home, you'll need to know how much you qualify for and whether your credit, income, and job history are adequate. All of these questions can be answered by visiting a lender and getting pre-qualified or pre-approved.

Pre-qualification simply involves visiting a lender, verbally informing the lender of your credit and income levels, and perhaps having your lender produce a credit report. On the basis of your statements to the lender (these are usually not completely verified), the lender can issue a written statement that includes the dollar amount of your proposed loan, its interest rate, and other relevant terms.

Pre-approval is a step above pre-qualification, in that the lender has verified income and credit information. A pre-approved buyer is like a cash buyer-other than the house being appraised, there is nothing in the way to prevent the buyer from obtaining a loan.

Being pre-approved for a home loan will place a home buyer in a position to make a better deal as well as increase the likelihood that your dream home does not get bought by someone else while you are looking for a home mortgage. There are a lot of Home Mortgage loan options available, so research them fully before you start searching for a home, make an informed decision about financing your home, then get pre-approved for a home loan before you make an offer to buy a home. This will put you in a stronger negotiating position when making your deal, give you the flexibility to act quickly if necessary to get the deal you want rather than let it slip away, and generally make the whole home buying process go smoother for you.