One of the most important steps in the home buying process is receiving pre-approval for a home loan. Many buyers actually apply for a loan and receive approval from a lender before searching for a home. This is called pre-approval.

Why is pre-approval important at the beginning of the home buying process?

- Pre-approval can cut days or even weeks off the closing process, since the lender has already conducted his credit analysis and approved you for a mortgage.

- Pre-approval strengthens your offer and negotiating position. A home seller will often choose an offer that is pre-approved for a mortgage vs. someone whose financial picture is unknown.

- Pre-approval will determine your price range and narrow your search parameters. Based on your down payment and that pre-approved mortgage amount, you will know how much you can afford before you start looking for a house.

There is also a significant difference between buyers who are pre-qualified and those who are pre-approved.  

A buyer who is pre-qualified is one whose lender has determined how much he/she can borrow based only on information the buyer has provided to the lender. Nothing, however, has been verified to determine the buyer's true creditworthiness. The buyer must fill out a loan application and go through the lender's approval process at a later date.

When a buyer has been pre-approved, the lender has already done a credit check along with verification of employment and deposit. The lender's pre-approval is a commitment to loan the buyer up to a certain pre-determined amount. The only thing missing is the lender's appraisal of the home to confirm its value.

You may use any lender you choose and if you use one of these, feel free to let them know that I referred you.