A mortgage preapproval from a lender gives you the ultimate advantage over other prospective home buyers. In a fast-moving housing market, where homes sometimes sell in a matter of days, a mortgage preapproval may mean the difference between getting or losing the house you really want.
A mortgage preapproval means that you've gone through all of the steps for having you mortgage approved, with the exception of having the home you want to buy appraised. The lender will check the various factors in your mortgage credit grade: your credit score, you mortgage history, your consumer debt history, and so on.
Unlike having a mortgage prequalification from a lender, a mortgage preapproval means that your request for a loan has already gone through the underwriter and you've been approved.
With a mortgage preapproval, you can set the terms of your mortgage before you even start shopping for your home: the interest rate, the length of the mortgage, the type of mortgage (fixed rate mortgage, adjustable rate mortgage, etc).
In going through the mortgage preapproval process with you, the mortgage lender is doing a lot more work than with a mortgage prequalification. However, you are not obligated to use that lender once you find the house you want. Still, it's to your advantage to stick with that lender, as there's always a chance that another lender may not approve you for the loan amount and terms that you want.
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