A mortgage prequalification gives you the confidence of knowing how much of a mortgage you qualify for before you even begin hunting for a home. Getting a mortgage prequalification before you start looking for a home will give you an advantage over other prospective buyers.
A mortgage prequalification letter from your lender gives you more negotiating power with the seller, because he knows that you're not likely to be turned down by your lender. If there are multiple offers on the home you're seeking to buy, and you're the prosepective buyer, your mortgage prequalification may be the deciding factor for the seller.
Also, many realtors will not work with a buyer who hasn't be prequalified. And lastly, a mortgage prequalification gives you the peace of mind of knowing whether homes you're looking at are in a price range that your lender will approve.
Thus, it makes sense for you to talk to several lenders before you begin your search for a home, and see which ones will give you a mortgage prequalification. You're not obligated to use the lender that prequalifies you, though. Lenders will go through the effort simply to try to get your business.
A mortgage prequalification is based upon minimum underwriting standards, such as your stated income, your debt ratios and so on. Once you find a home you want to purchase, you'll have to go through the process of being approved, where the lender will verify your income, check your credit grade, have the property appraised, and so on.
Many people confuse mortgage prequalification with mortgage preapproval. The two are not the same. A mortgage prequalification says that you are qualified for a certain mortgage amount, but does not say that you've already been approved for that amount.
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