Prequalification vs. Pre-approval
When a lender prequalifies you they are giving you an estimate of what you can afford based on the information you tell them. The prequalification is only as good as the information you tell them. A prequalification should give you a basic idea of what you will likely qualify for and which loan programs may work for you. A pre-approval is much stronger than a prequalification. When you obtain a pre-approval from a lender they are stating they verified all your information, they didn’t just go off what you told them. They will need documentation of all your assets, incomes and debts (see Items Your Lender Will Need). When you make an offer on a home, most sellers will request a pre-approval letter. It is even better if you can provide the pre-approval letter with your offer.
It is important to know that a pre-approval is not a guarantee. Lenders will still need to review the appraisal, re-check your credit, they will check no deregulatory changes are made to your financial situation after you apply. Also your file must be sent to underwriting, and it must meet all conditions the underwriter sets. The other thing to know is if it has been awhile since you were pre-approved its a good idea to check in with your lender to give them updated documents and see if anything has changed that affects your qualification. Nowadays things are changing all the time, what may have been acceptable 3 months ago may not be acceptable now or vice versa.
If you need a lender that can prequalify and/or pre-approve you ask your real estate agent for some recommendations.