Getting pre-approved generally means you receive a loan commitment from your mortgage company before you have found a home, based on a review of your credit and finances, and that may be subject to certain conditions. Having your application pre-approved shows sellers that you're a qualified buyer and helps you establish a clear price range. You'll know what price range your lender will approve - and you'll be in a position to make an offer as soon as you find the right home.

The process of applying for a credit pre-approval is the same as a typical mortgage application, except that it doesn't include information on the property you will purchase. Your mortgage loan officer collects information on your credit, income, assets, and debts, and sends this information through an underwriting system. If the underwriting process determines that you qualify for a loan, you receive a loan commitment for up to a certain amount, which is contingent on the property meeting certain criteria. Some lenders may charge a fee for giving you a loan commitment.

There are many good reasons for getting a credit pre-approval before you buy a home:

• It makes your home search more efficient by allowing you to focus only on homes you know you can afford.



• It lets sellers know that you can back up your offer, so they don't have to worry about whether you can get a loan.



• It lets you know early in the process if you will have difficulty getting pre-approved, so you have a chance to address problems before finding a home.



• It gets most of the mortgage process out of the way upfront, so you can complete your transaction quickly after you find a home.