PRE -QUALIFIED OR PRE-APPROVED??

You hear lots of talk on tv and the web about being pre qualified to buy a house, but is it the same as being pre-approved? NOT by a long shot.
There are big differences in the two. Being pre - qualified means only that your income to debt ratios are within line to purchase. This means that with your income in mind or that of you and your co borrower you qualify to purchase a home.
A lender or a Realtor who pre-qualifies you for a purchase is only determining if your income is sufficient to cover the payment on a property.
Income ratios for certain loans may be a little higher. Often a person qualifies for a home purchase for more than they feel comfortable for. Please if a lender of Realtor tells you a price range that you don't really agree with , don't buy at the top of your price range unless a couple of situations exist. Those conditions would be that you are due for a promotion, an upgrade in job title, or you know a major raise is going to be yours for certain. Don't buy a home thinking that your pay is going to go up and then be stung with a payment and a property that makes your life a daily struggle . When you buy at the top of your price qualification, and you get sick, have surgery, are off work for extended periods of time or heaven forbid you loose your job you are in deep trouble. If you leave a little leeway then you allow for possible changes in your financial future.
Of course if you have the funds for a major down payment and can keep your payment on this higher priced property in range with your comfort zone it is a different story.
Now that you have a pre qualification, you need a pre-approval, this means that your credit is checked and the information given the lender has been okayed and they know that you will be able to obtain a loan on a property when you find the one you want.
In the early 90's it became common place for buyers to get pre approved for a loan and it is a great thing. Formerly, buyers gave the agents their basic information and were pre qualified by the agent and lots of times it turned out they had obstacles in their credit files they were unaware of or they just plain took a chance that it would never be found out and wrote an offer to purchase a property anyhow. They then waited two weeks while the paperwork got started and then cried foul when they were not permitted to finance a home.
These simple tools to aid buyers and their agents make the home buying process so much easier and with a pre-approval they have more credibility with sellers when an offer is presented to them If a seller knows that the buyer who has written an offer on their property is indeed going to be able to be financed then they might be somewhat more negotiable with an offer that is not what they had hoped for.