Importance of Pre-approval

Pre-approval determines the size of the mortgage you qualify for, and therefore, decides the price range of the homes you can afford.

Pre-approval helps you to:

* Know how much you can borrow.

* Confirm your ability to qualify for a mortgage based on your credit, financial and employment information.

* Strengthen your position to make an offer on a house. A seller will be more willing to accept an offer if the buyer is pre-approved.

To become pre-approved, you'll need to work with a mortgage lender. The mortgage lender will review your credit history, earnings information, employment history and assets. You will need to provide certain documents to the lender to verify this information.

After the review, the lender will give you a "pre-approval letter." The pre-approval letter tells home sellers that you have the ability to qualify for a certain mortgage amount.

Getting pre-approved is not the same thing as getting pre-qualified. Pre-qualification simply states that the borrower qualifies for a loan based on some preliminary questions but does not commit the mortgage lender to approve the mortgage. The mortgage lender will still have to conduct a complete review of your financial situation, including your credit report and your income and employment history.

The pre-approval process is more thorough. The lender does most of the work for full approval except for an appraisal and title search because there is no property identified to buy.