"Pre-qualification" is just the first step in the mortgage application process.  It is not a guarantee that you will get the loan, it just means that you can qualify for a certain loan amount if your income and credit information checks out as stated.  However, that is not always the case.  You may have overestimated your actual income, or more commonly, you may have underestimated your monthly debt payments or how many late payments you may have on your credit report. The only way to know for sure that you will get the loan amount that you want is to get "pre-approved" for a mortgage.  That means filling out the loan application and all the other required forms and providing documentation to support your stated income, such as paycheck stubs and W-2 income tax forms.  The mortgage company then checks your credit, verifies your income and cash deposits and puts together a complete loan application file with supporting documentation.  Your loan file is then submitted to an underwriter who looks over the file to make sure it meets the lender's guidelines for the loan program for which you are applying.  If everything is in order, you will receive a "credit approval" on the loan.  That means you have a written loan commitment based on your income and credit history -- all you need now is a house to go with it. 

 Home sellers and real estate agents love to work with homebuyers who have been pre-approved for a mortgage.  They will take you more seriously when you make an offer, and you will have more bargaining power because you can guarantee that your deal will close.  It's the next best thing to being an all-cash buyer. Home sales sometimes "flip" when the buyers fail to qualify for a loan and the seller is forced to put the house back on the market.  By relieving the sellers of that anxiety, you can drive a tougher bargain on the purchase price. 
 In some cases, being pre-approved can actually make the difference between buying the house of your dreams or losing out to the competition.  Homes in the "affordable" price range are selling very quickly today in many areas of the Puget Sound region.  Even though the pace has slowed since last year, there are still situations where sellers receive multiple offers on homes that have just hit the market.  In every case, the homebuyers who are pre-approved for a mortgage win out over the buyers who have not yet taken that step.

 For example, I once had a mortgage client who was shopping for a home.  Her real estate agent kept urging her to get pre-approved for a mortgage, but she said she wasn't in a big hurry.  Finally, she came into my office and filled out a loan application.  The very next day, the real estate agent called to say that my client was making an offer on a home and he needed a "pre-qualification letter" stating that she was qualified for a loan amount large enough to buy the home.  I faxed the letter to the agent and the next day I asked how it went.  Despite the fact that my client offered $2,000 more than the asking price and she had a loan pre-qualification letter from me, she lost the house.  There were five offers on the table the first day the home hit the market and the winning buyer had a letter from a mortgage company stating that they were PRE-APPROVED for a loan.  Now, if my client had started the loan application process just a day or two sooner and given us time to get her pre-approved for a loan, she might very well have been the happy buyer walking away with signed purchase and sale agreement that night.  The good news is that with the computerized automated underwriting systems being used today, we can now get an actual loan approval the same day you make application. 

So don't delay!  If you are shopping for a home, fill out a loan application today and get pre-approved.  I know that filling out forms isn't' a lot of fun. But it is much easier to complete the loan application process while you are cool, calm and collected. There is plenty of stress involved in negotiating the purchase of a home without adding the stress of applying for a mortgage at the same time.