It used to be that buyers could go house shopping and when they have found their dream home, then they go to get pre-approved. However, in today's market, that has proven to be one of the least effective methods in landing the dream home.

Most lenders can pre-qualify you for a mortgage over the phone. Based on general questions about your income, debt, assets, and credit history, lenders can estimate how much mortgage you qualify for. However, being "pre-qualified" and "pre-approved" are two different things. Pre-approval means that you have applied for a mortgage; you have filled out the mortage application, received your credit report, and verified your employment, assets, etc. When you are pre-approved, you know that you can buy; the maximum loan amount that you can afford; and you now have power in the marketplace.

A pre-qualified letter is not verified and in essence, does not count for much if you are competing with other buyers who are pre-approved. When you are pre-approved, you and the seller know exactly how much house you can afford. It gives you credibility as an interested buyer and lets the seller know immediately that you are qualified for a loan to buy their property.

In addition to being pre-approved, it's also important to be
pre-approved with a legitimate lender. Legitimate lenders include: banks, mortgage bankers, credit unions, savings and loan associations, mortgage brokers, and some online lenders.

LENDERS TO SEEK: Those you feel comfortable with and who have plenty of information to offer the buyer on a variety of mortgage programs, interest rates, etc. and seem ever helpful, informative and organized.

LENDERS TO AVOID: Those who appear disorganized, and who do not have ready information about current mortgage programs, interest rates and mortgage points or costs may either be inexperienced or careless which will make you increasingly uneasy if they become very difficult to reach or communicate with. Your mortgage lender should be able to keep you informed at all times to the best of their ability.