Skip the guesswork: Start with a preapproval

Prequalification is easy, it's fast, there's no obligation, and you can apply to several lenders to compare offers. That makes it a good option for someone who is just beginning to explore the possibility of buying a home.

To apply, you don't need a lot of detailed documentation. Many lenders don't even pull your credit score, but base their estimate on what you tell them about your income and current debts. Keep in mind, though, that the lender is not obligated to lend to you if you don't meet their criteria when you actually apply.

Preapproval is a bigger step toward confirming what you can borrow. Unlike prequalification, you'll need to complete a mortgage application and supply income and debt verifications like current pay stubs, tax returns and bank account statements. The lender will also pull your credit history and credit score.

The benefit of the more extensive process is that the lender can give you a much firmer estimate about what you can borrow. The extra details can give them confidence that you will be able to afford to repay what you borrow.

• You can get preapproved by several lenders within about 30 to 45 days without affecting your credit score. This allows you to shop and compare rates.
• Having a preapproval letter gives you more credibility with home sellers, since they can be more confident you can actually get a mortgage. Some sellers won't even consider offers from buyers who aren't preapproved.
• Most preapprovals are good for 90 days, so you have plenty of time to search for the right home. You can also renew the preapproval by submitting updated paperwork.
• Once you find a home, preapproval can help speed up the rest of the mortgage process, since a large part of the work has already been done.

Lenders can't make a final decision until you give them a purchase contract, so they can confirm that the home is valuable enough to serve as collateral for what you want to borrow. In addition, if you have major financial changes such as loss of income or increase in debt, that could affect your final approval.

Don't be discouraged! Here's how to increase the odds of approval if you try again:

• Shrink your budget. It may be that a lender will be willing to lend a smaller amount.
• Make a larger down payment. However, this may mean waiting while you save extra money.
• Beef up your credit score. Pay off debt, make sure all your payments are on time, and avoid opening up other types of credit such as new credit cards or a car loan.