"Pre-qualification" and "Pre-Approval" are terms that have been used interchangeably for years, albeit incorrectly.   When someone is thinking of shopping for a home, one of the first steps is speaking to a mortgage lender (unless of course, they are paying cash).  The lender will let them know how much they can borrow and what the terms will be.  They will then issue the buyer a pre-qualification letter or pre-approval letter.

A prequalification is made based on statements from a buyer without providing any documentation or doing any or very little actual research.  A pre-approval is issued when the lender has pulled the buyers credit history and confirmed assets, income, employment, ratios, etc.  A pre-qualification letter is essentially worth only the paper it is printed on while a pre-approval letter shows any potential seller that they are dealing with a ready willing and most importantly-ABLE buyer.

There are many choices in lender: banks, mortgage brokers, mortgage bankers, local providers, internet providers and more.  It is of the utmost importance to use a mortgage provider that is proven, accessible, and trustworthy.  Internet lenders lure buyers in with low interest rate ads--which often are not correct or applicable to most buyers.  They often birth nightmarishly slow turn around times and little communication.  Big out of town lenders may be effective but offer little in terms of service and communication. I always recommend a solid local lender that is familiar with the nuances of the particular market. These folks will typically be available to meet you in person, will answer your calls, and actually care about your happiness and satisfaction.

Contact your local Realtor and find out who they recommend before going shopping.  If you interested in Wilmington NC Real Estate, Chris Baynes & Associates can help.  You don't want to watch that great home slip away because someone else was one step ahead of you!