Not to get all semantic on you but there is a distinct difference between being preapproved and prequalified. Homebuyers can get themselves into trouble when they are think they are approved when they have only been qualified. Just because you have been prequalified is no guarantee that you can get a loan. You don’t want to confuse the two.
Your being prequalified is simply a step in the entire mortgage procedure. By giving your banker or broker your financial picture including income, assets and debts you have started the ball rolling. After scrutinizing the info, your lender can provide you with an estimate of how big a mortgage you would qualify for. This does not mean you have your loan, this estimate is provided without a thorough examination of your credit report and your credit worthiness. It is a somewhat cursory examination.
Now we are getting somewhere. Preapproved means you are good to go. It is a very involved cycle and starts out with filling out a mortgage application, supplying all the docs on your financial life. This is how your lender determines how much they will lend you, what your interest should be, etc. When you are preapproved, you get in writing, a conditional commitment for the loan amount and you are now ready to go shopping! You know what your loan amount will be, and you can look in your precise price range.
Once you have found the house of your dreams, make an offer, you simply fill in the details about the house and your preapproval thus becomes a completed application.
The Final Commitment
The whole thing becomes real once the issuing bank has approved you and the house. The house must be bought at or below the appraised value of said house. The lender will do a final credit and income check to ascertain all is still good. Then they issue a loan commitment letter signifying you can close on your American dream house.
The moral of the story is get preapproved it will save you time and angst in the long run.