By getting pre-qualified before you apply for a loan or shop for a home, you'll have a much better idea of how much you can borrow. A pre-qualification or pre-approval letter is a nice thing to have when shopping for a home, too.

You can get pre-qualified over the telephone or online quickly. This is not a final offer, though; a much more rigorous process involving verification of credit, income, assets, and liabilities will be necessary before you are given a loan offer. Pre-approval is a good first step toward buying a home, though, and it can help you:

• Find the maximum house you can afford to eliminate time wasted looking at properties that are out of your price range.
• Gives you a stronger position to negotiate with a seller because he knows you have nearly-guaranteed cash to buy his house.
• Close quickly when you sign the purchase contract.