Prospective home buyers are strongly encouraged to obtain pre-approval before even beginning the process of looking for a new home. Pre-approval means a lender has examined your financial situation, and approved you for a home loan of a pre-determined amount. Usually, you will receive a certificate or confirmation detailing the loan amount, and the fixed interest rate that will be guaranteed for a set length of time.
Pre-approval will tell you how much you can afford and how you are going to finance the purchase of your home. It will also allow you to negotiate a price that you know will be within your budget, as well as the maximum you can afford.
The mortgage pre-approval process is generally a free service provided by most lending institutions, and will give you peace of mind during the search process. It will also tell sellers that you are serious about purchasing a home.
