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Most people are unable to buy a home without the help of a mortgage lender. Read on to find out why it's so important to involve a lender early in the home-buying process so that things will go smoother later on.

Three Financing Steps

Buying a home is a huge undertaking for almost everyone, even if it's not your first home. Now more than ever before, getting approved for lending involves a multi-step process. First, a pre-qualification can get things started. Then, buyers can get more in-depth information by filling out a mortgage loan pre-approval application. Finally, the actual loan application is submitted once a home is found and all parties agree on the purchase price. To break down the two preliminary lending steps, read on.

Mortgage Pre-qualification

This step helps buyers identify how much home they are likely to be able to afford when they locate one. The application is short and easy to fill out. You will need to know your monthly income, debts, employment history, etc. With a pre-qualification, nothing is verified. It's up to you to be as accurate and honest as possible with your submission. The closer you are to the exact numbers, the more accurate your result will be. What you get back in return is a range of home prices within which you can perform a search. You will also receive a letter from the lender certifying the pre-qualification. This is not an approval – it's only for information purposes.

Mortgage Loan Pre-approval

This takes things a step further. You might want to skip the above step but some buyers need time to improve their financial picture before they do a pre-approval. When you apply for a mortgage loan pre-approval, your credit will be checked and your information will be verified so it's a more serious step. You will need the same information, in most cases, as was needed for the pre-qualification but you might also need tax returns, bank statements, and more. While a pre-approval is still not a guarantee of a loan, it does provide a good idea of how much the buyer can be approved to spend when they fill out the actual loan application. The resulting letter also provides sellers with more confidence that the buyer will be able to obtain financing and close the deal.

Speak to a local lender to find out more about the above steps and get a mortgage loan.