Why prequalify for your mortgage? 4 reasons to get preapproved

By Shelley Sines

October 2023

This story was originally written in 2018 but has been reviewed and updated as of October 2023.

While it may seem intimidating to prequalify for a mortgage loan, it's a great first step when you’re just beginning to shop for a home. You wouldn’t bake a cake without making sure you have all the ingredients first, right? (Unless you’re me, literally every time I try to bake anything. Luckily I have really nice neighbors with well-stocked pantries.)

According to the Consumer Financial Protection Bureau (CFPB), a prequalification (sometimes called a “preapproval”) from a lender is a letter that specifies how much the lender is generally willing to lend you. The lender typically arrives at that number after evaluating your assets and debt and checking your credit.

Is there a difference between preapproval and prequalification?

The prequalification or preapproval process varies from lender to lender, but it should always result in a conditional commitment in writing. The distinction between prequalification and preapproval isn’t always readily apparent, given that different lenders employ their own interpretations of those terms. That’s why, in accordance with the CFPB’s suggestion, potential homebuyers should verify with the lender that the letter – whether labeled as a prequalification or a preapproval – furnishes adequate details for sellers to regard it seriously.

This letter isn’t a guaranteed loan offer, but having it in hand can give the seller confidence that you’ll be able to get financing to buy the home. And if that isn’t enough incentive for you, here are 4 more reasons why you should get prequalified early in the home-shopping process.

1. Peace of mind

There’s plenty to stress about when you’re home-shopping, so get your prequalification out of the way first. Instead of agonizing over the state of your finances, you’ll have peace of mind knowing you’re already approved. Put that energy toward worrying about how friendly the neighbors seem, or deciding whether or not you can live with that red shag carpet in the basement.

2. A competitive advantage

It’s a sellers market, and that means you may need extra ammunition if you want to place an offer on a decent home in a desirable location. A prequalification not only makes your offer credible, but also affords you an advantage should you submit an offer at the same time as another home-shopper. A prequalification could be one of the deciding factors in the seller accepting your offer over another.

3. Know what you can afford

Even if you’ve crunched the numbers yourself, it pays to meet with your lender, lay out all your finances and determine what you can really afford. This will save you time, energy and potential disappointment if you find out you’re home-shopping at too high of a price point before you make your offer (or conversely, perhaps you can afford more than you realize). And getting prequalified can be a good way to spot potential issues with your credit before you make a serious offer on a home.

4. A confidence boost can mean better negotiation skills

Now don’t get too cocky, but being prequalified for a mortgage loan should help you feel more assertive as you’re home-shopping, especially if you’re a first-time homebuyer. No imposter syndrome here. Do you like those light fixtures? Make sure they’re in your offer to buy! Why not ask for everything you want — you’ve been prequalified, and that’ll carry some serious weight with the sellers.

Stephanie Morrow

Important information

Laura Baez Daniel

Great help for firs time


This is important know as beginner.


very good information to known when starting to buy a house


Important Information

Betty Riggs

Just know the atmosphere around you will be what your looking for and make sure you know in your heart this is the place that you truly want and can be able to have peace of knowing that’s where you will be spending your down payment and the loan that you are applying for and remember that you have to look at all aspects of the place no matter the location


This was helpful.

Justin Salisbury


Justin Salisbury


Amanda Rodriguez

Good to know that pre-qualifying is a good starting step to the process. Knowing how much they can lend you.

Elba Tavarez

This information was very helpful and informative.


Very informative!

Tristian Gustason

This information was very helpful and informative.

Antoinette Gwaltney

Good idea to know what price of home you can afford than getting feelings hurt and let down in this process.

Jeremy Nansteel

This was very informative.


Great questions and answers I think all applies we all have different views and points on how to look at things.

Tiffany Hasty

Knowing what you can afford is very important!


Just starting the process and having knowledge will be a real blessing.

clyde james

very great information to know. thank you for the helpful information

Kevin Carver

Good stuff

James Velasco

I am very excited to be a homeowner

Olivia Ortiz

Very helpful information,Thank you


Very helpful information. Much appreciated.


Awesome information, thank you!



Leonard Moore

Thank you that was very helpful information.

Wendell Lyons

Iit's good to know that you can own your own home by applying yourself.

Ivy Kennedy

Why Thank you, That was some great info!

Brandon Tamburelli

Got it

Dorothy Belony

This is useful information in the long run. Prequalifying assist in the decisions made in the long run and I think that leads to a realistic outcome.

Charma Birch

Helpful information

Diana Rodriguez

I found this to very helpful step in the house buying process because we knew, we had a budget to keep in mind and we were being set up for success.

Justin Taylor

Good Information for people that hasn't been through this process before.. Helps understand Pre-qualification and what it does for someone looking into buying a home.

Erwin Peralta

I know that buying is better then renting in the long run.

Mashonna Nunley

This is very helpful information.

Meng lor

Good info.

Demarco Mcdaniel

I know I’m ready

Sherry Pirter

This was very helpful in understanding the process of buying a home, I’m a grandmother who’s 30 yr old son passed away and in a small house of about 975 sq ft and want them to have their own bedroom and more room is needed. Envoy has been great at working with me and helping me through the process.

Jonathan Mercer

Helpful but would’ve liked an audio version to listen to while reading as well

barbara cahoon

very helpful


Very true

Shana Stroy

Truly informative information , I feel the pre-approval is an important step in purchasing a home

Kaddour Yamani

Thank you for the tips

Grace Millinga

I want to buy a Condo , my fear is all those fee for condo goes high every year. But I will rather get something that I owned than paying rent. I am going to try and see if Iam qualified

Norris H Matthews

Very good advice

Jaron Hart

This information was very helpful!!

Muhammad Sharjeel

Proper preparation is very important Before buying home. It’s saves a lot of time. Thanks

Ruby Gordon

I know buying house is a big step but I ready now . Buying is better than renting

Theesa Martinez

I am excited to purchase my new home all by myself. Looking forward to enter into a new journey in life.

dim tuang

This will going to be my first time, I am so impressive for taking this class, it make me more comfortable what I don't know with and what I knew before. So, I have learned a lot of things to able to prepared and getting ready for to buy a new home.

Eric Trinidad

I appreciate this information very informative and you learn a lot everyday when you dedicate to read properly these steps to follow to buy a home

Christine Farmer

This information is helpful

Joseph Petty

After reading this for the second time, I understand what always ask for help when you are trying to buy a house because it's possible you could miss up everything, you are working for.

Joseph Petty

This information with very helpful to me, even though I still don't quite understand.

Allen erickson

I don’t have a tip buying a house is very hard

Brenda Rojo

Thank you for your helpful tips


Thanks for the tips

Dereka Ollison

Thank you for the helpful tips.

Yolanda miller

Thanks very valuable information

Christopher Roldan

My wife and I are first time hombuyers and is not easy, but with all the information that we are learning about mortgage, pre approval and how to be prepared it has help us a lot.

Nathan Jarrett

Very useful information to help understand the basics of home buying

Natasha Clark

Very helpful information...

Timothy Linley

Very informative. Thanks you!

sara berry

this was helpful information


I am purchasing a second home and very familiar with the lender and buyer requirements, however, bank, tax laws, and your financials change

William w kirk

Thanks for information


Thanks for the information.

Rick Rosell

For the longest time I didn’t even bother with trying to get pre qualified, because I always thought I would not be able to. However now that I have gone through the process, I wish that I would have done it a long time ago

jay smith

prequalifyi is fantastic i think it makes things esaier also not so stressful. Its alsogreat info for a new home buyer.

Martin W Ngugi

I find prequalifying makes the fear of not being taken seriusely by the agent and seller disappear.

Antonio Davis

Great information

Tereza Cristina Aramis

Before searching for a home, you should know the process step by step.


I want to buy a home!

charles stacy

sold our house..temporarily renting until we found our next house

William Morreau

My name is William my fiance is currently renting which is way more than a mortgage. I currently have a stepson at home and only two bedrooms. We could use the extra space for family gatherings and any guest. I generally go out of town to visit family considering I do not have the space however, pay the price to own a home. I have had break end attempts and car damage which doesn't sum up renting at all. I would like a place to call home and have family. I want a place to retire and enjoy.

Jennifer Lucio

I want to buy a home


I like the simplified explanations, but I fear it is over-simplified and may seem misleading. Also, as I am reading more and more on this, I feel you are using, interchangeably, two distinct concepts-- Pre-qual and pre-approval. They are not the same!

Liz Keuler - Readynest editor

Lean, thanks for your comment! In researching this post, Shelley found that the distinction between pre-approval and prequalification is less clear than it used to be, as lenders often have their own definitions. As the CFPB recommends, homebuyers should confirm with the lender that, whether they call it a pre-approval or a prequalification letter, it provides enough information for sellers to take it seriously.

June Sego

I feel that everyone needs to be educated with financing before purchasing a home. It takes a lot of stress away and boosts confidence by getting prequalified for a new home.

Cindy Ann Carlson

Getting pre-qualified was an important part of beginning my home buying journey

Amy Wallow

Very informative

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Shelley Sines has been writing for MGIC since she graduated from college in 2007. Currently raising a sweet little family with her husband in the suburbs of Milwaukee. Happiest when cooking or gardening. Competitive Scrabble player. Enthusiastic about road trips, wine, good TV.
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