When you start looking for a home or thinking about looking for a home, one of the questions you are definitely going to run into is: should I be prequalified or preapproved for a loan? It’s an important distinction.

Usually, getting prequalfied for a mortgage, in my opinion:
1. is usually extremely easy unless you have obvious blemishes on your credit; and
2. means almost nothing.

Twixt the prequal and the purchase, there lies many a slip.

Ideally, once you get serious about buying a home, you should get a preapproval letter. A preapproval is also referred to as a credit-approval and involves amongst other things getting a loan application filled out, having your credit screened and getting an approval from a lender that – as long as the appraisal bears out on a home – they will fund the loan.

Here’s another reason a preapproval means more than a prequalification – when you meet with a lender you will have your questions answered and get a better idea of what your monthly payments will be. A computer doesn’t do that. Or answer questions regarding your specific financial situation.

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