Pre-qualifying for a loan makes you an appealing buyer in the eyes of the seller. Pre-qualifying means that you speak with a lender and verbally give your information on income, debts, assets, etc.

Pre-approval is a step beyond a simple pre-qual, it approves you for up to a certain mortgage amount, even before you look at your first home. It involves more work on your part (filling out paperwork, submitting documentation) but it tells sellers that you are really serious, and once approved, ready to roll. (With a pre-approval, all that's needed is a valid purchase contract, an appraisal and a preliminary title report for the lender.) Once you do start looking, you won't waste time looking at homes you won't be qualified for-and you'll be in a strong position to make an offer as soon as you find something you like. Because buying a home is about both price and terms, one of the best ways to save money on the price is to offer great terms - such as a pre-approval.

Selecting the best financing package available is as important as finding a home that meets your needs.