If you're thinking about purchasing a home, getting pre-qualified should be the first step you take toward getting a mortgage.

Pre-qualification indicates whether or not you're likely to qualify for a mortgage under a lender's programs and provides an estimate of the amount of money you may be able to borrow. This information allows you to shop for homes which are in your price range and does not represent a commitment of any kind between you and the lender.

Getting pre-qualified for a mortgage is an important first step in purchasing a home because it helps you determine how much house you can really afford," said Jay Thompson, Zillow's Director of Industry Outreach. "It's fast, easy and often free, and it will help your lender and agents get a good understanding of where to begin when helping you in the search for a new home."

Pre-qualification is based on your financial data: income, assets and, possibly, your credit report. Many lenders pre-qualify home shoppers online or over the phone and it is often free. If you continue down the path toward home ownership, you'll need a lender you trust who puts you at ease. While you are not committed to the lending company that provides your pre-qualification, this process gives you an opportunity to find a lender who is highly rated and reviewed and with whom you would feel comfortable working.

Pre-qualification is often confused with pre-approval.

Pre-approval takes pre-qualification a step further. The lender will verify your income, assets, debts and credit history, and then issue a letter stating that your mortgage is approved for a certain amount. The pre-approval will say how for long it is valid and may contain some other conditions. Lenders sometimes charge a pre-approval fee to cover the costs of your credit reports and application processing. Similar to getting pre-qualified, if you get pre-approved by a certain lender, it does not commit you to getting a mortgage from that lender.

The processes may also save you time when you find a home you wish to purchase, because the lender will have already started verifying your loan eligibility. Bringing a pre-qualification or pre-approval to the negotiating table shows sellers that you're a serious buyer.

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