It’s crucial that you know exactly how much money a lender will loan you and how much it’s going to cost you each month. Don’t waste your time shopping for a $500K home if what you can afford is a $350K home or even a $700K home. A good Realtor will always advise you to get pre-approved by a lender before the home-shopping begins. Notice that I said “pre-approval” not “pre-qualification,” because there is an important difference between the two. A pre-qualification can be done by a lender over the phone with no documentation provided to verify the information you tell the lender. This doesn’t mean that you aren’t telling the lender everything intentionally, but many of us don’t have the memories of credit reporting agencies (which we all know is impeccable, for better or worse). A pre-approval requires that all documentation be provided to the underwriter. These documents include the completed loan application, credit report, pay stubs, two years income tax returns, bank statements, employment verifications, mortgage verifications if applicable, and any other paperwork the lender asks for. Without the verifiable documentation, a pre-qualification is not a binding agreement to give you money and a good agent representing a seller knows this. When a buyer is approved, it is rare for a lender to rescind the loan offer and this typically only occurs is there are changes to your financial status after approval. Once a buyer knows how much house they can afford, the shopping begins.