Before you full in love with you dream home
Being Prequalified and Preapproved both refer to a letter that you get from the lender. The lender specifies how much your lender is willing to lend to you up to a specific amount. The letters are very helpful when you are trying to purchase a home but the letter does not guarantee you a loan offer.
There’s not a lot of difference between a Prequalified and Preapproved letter. There are some legal distinctions, in practice both terms refer to a letter from lender that says that the lender is generally willing to lend to you, up to a certain amount. This is based on certain assumptions. The letter does help you be able to get financing to buy your home but once again it is not a guaranteed loan offer.
Lenders may use different words like “Prequalified” or other lenders call it “Preapproved” but in reality, lenders processes vary widely, and the words don’t say all that much in the lender's process. The best way to make sure that these letters will help you is to ask a Real Estate Broker.
There are some lenders that are willing to provide you with a Commitment letter. Without having an address or a purchase contract before they will review the file for approval. You will need to submit certain documents for review. That being said the commitment letter allows the borrower to make their offer knowing that pending the appraisal, title and the Homeowners insurance that the financing is approved.