Pre-qualification is obtained by providing a lender with your overall financial status which includes debt, income and assets. After careful review, the lender estimates how much the borrower can expect to receive. Borrowers can obtain pre-qualification via a phone call, online or in person at no cost to the borrower as a rule.

While pre-qualification is quick and easy, it isn’t a given that you’ll be able to secure the loan as it doesn’t involve the lending institution obtaining a credit report and reviewing bank statements and other documents that give the lender a clear picture of your financial abilities. It does, however, get you on the path to knowing what price range you should be shopping within and gives sellers confidence that they can take your offer seriously.

Next, you need to be pre-approved.