First step is to talk with your mortgage broker. Your mortgage broker will discuss with you what you are looking to do, take an application and look at your credit.

A pre-approval letter is a powerful tool in your search for a new home. It shows the sellers that you're serious. Many buyers find that they have increased negotiating clout if they are pre-approved before they conduct their home search.

Your mortgage broker will usually run your credit and ask you to state your income and asset information when determining a pre approval.

And with pre-approval, income, employment and assetts are verified unlike being pre-qaulified where the mortgage broker will only pull credit and get other information verbally.

When getting pre-approved for purchasing a home, the mortgage broker will send a "pre-approval" letter, stating that you are approved for the purchase of a home, up to a certain dollar amount. Then you will know what size home (in dollars), that you should be looking for.

Home buyers armed with a Pre-approval Letter is often looked upon favorably by sellers because it shows that the homebuyer has taken the time to get approved and is serious in finding a house. Moreover, it shows the seller that this homebuyer will be able to procure financing.

The pre-approval is not a commitment to lend. It is simply a letter stating that, with the information you provided, you are qualified for a loan for a certain amount. Should any information you provided change, it may affect whether or not you qualify, or the amount you qualify for.

Different states have different requirements regarding mortgage loan approvals. Consult with your mortgage specialist to see if your state has special laws or statutes regarding pre-approval.