Why Get Pre-Approved?

1. Pre-qualification acts as a dry run of the loan application process. The mortgage lender will use details you provide about your credit, income, assets and debts to arrive at an estimate of how much mortgage you can afford. The whole process may take only minutes or a few hours at most, and is free.  While a "pre-qual" is non-binding to the lender (because the information you provide has not been verified), it does serve as a good indication to potential sellers of your general creditworthiness.

2. Pre-Approval.  The lender will further qualify your ability to obtain financing by verifying your credit with at least one, and usually more credit reporting bureaus.  It signals to the potential seller that you are going to be able to get financing, subject to final verification of income, employment and assets, and of course a successful appraisal.

3. These days most sellers will NOT accept an offer without at least a pre-approval letter, so if you are serious about buying this is the first step towards getting you in your new home.

4.  The gold standard, is to be pre-underwritten.  The lender will essentially require all the documentation that most buyers provide them AFTER they go under under contract.  By getting pre-underwritten, you essentially are now fully approved for the loan subject to only the appraisal, and a very final verification.  This now enables you to close very quickly as the hard part is done prior to submitting an offer.  This also puts you in a similar position to that of an all cash buyer, and perhaps even better, allowing you great negotiating leverage to have your offer accepted.