One of the most disheartening experiences a homebuyer can undergo is to find the property of their dreams, only to have their mortgage application denied.  Between the countless hours of searching and the enormous emotional investment, this can be a crushing blow.

The easiest way to avoid this pitfall is to obtain pre-approval.

First, it is important to recognize the difference between pre-qualification and pre-approval.  Pre-qualification is basically an informal discussion between the buyer and the lender, wherein the lender makes an assessment of the buyer's borrowing potential.  This assessment is based solely on what the borrower tells the lender.

Pre-approval, on the other hand, is based on documented and verified information.  Credit history, employment history, income and cash on hand are all used to determine a very realistic portrayal of a buyer's borrowing potential.

There are two major advantages to getting pre-approved.  The first advantage is the most obvious.  Pre-approval lets a homebuyer know how much they are able to spend.  This can be very advantageous when looking for a new home.

The next advantage is more subtle, but also more powerful.  Pre-approval is a very direct way for a homebuyer to tell a seller that they are serious about buying a home.  If a seller is weighing multiple offers, they may be inclined to sell to someone who has been pre-approved, even if the offer is not the highest one.  Pre-approval is the next best thing to cash in the bank.

Between eliminating potential heartaches and increasing buying leverage, pre-approval is a very intelligent and advantageous option for any prospective homebuyer.