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Finding out how much home you can afford is basic to a successful home search. But getting pre-approved for a mortgage is even better. Why? A lender who pre-qualifies a buyer is merely saying that a quick overview of the buyer’s financial picture indicates he or she can afford a home of a certain price. Pre-approving the buyer, however, means the lender has taken an in-depth look at the buyer’s finances and made a commitment to finance the buyer’s home choice up to a certain price. (This assumes the home appraises well and meets other lender criteria).
Home sellers heavily favor buyers who back their purchase offers with loan pre-approval because those contracts have a higher probability of going to settlement.