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Pre-qualify is where you share your financial information with a lending professional or someone quite familiar with loans and that person sees what you are likely to qualify for. No credit checks are done. It really helps to know your FICO score, so you may want to request your credit reports and pay for the credit scores from all three major CRAs--if you request this information yourself, there is no hit on your FICO score. If you are married and your spouse will be on the mortgage, have your spouse also request the credit reports from the three CRAs and credit scores, too. A lending professional could take a look at the credit scores, your credit reports and see what typical amounts you would qualify for and what the payments would likely be at today's rates. (Interest rates may go up in 6 to 9 months so don't plan on the top dollar amount you could qualify for today.)

Since the lender hasn't personally pulled your credit reports or credit scores, nor verified assets, pre-qualification doesn't carry as much weight as pre-approval.

Pre-approval is where you share your information and the mortgage professional also orders your credit reports and the mortgage-specific credit scores, as well as verify assets. (The algorithm used for mortgages is a little different from the algorithm used for credit cards.) This one will have a hit on your credit score, but a single inquiry in a 6-month period would likely be small. However, if you want to show a pre-approval letter to the seller's agent so the seller knows you are serious and already have financing arranged, your offer will have a better chance of being accepted by the seller than a similar offer without a pre-approval letter.

Obviously, I want to do all I can to keep my FICO score of 786 in good shape.

If I recall correctly, you need a FICO score of at least 720 to qualify for the better interest rates (all the best programs except for a couple of the best rates for specialized situations). So, basically, you are likely to qualify for just about any advertised mortgage, as long as you meet income requirements and don't have too large existing debt payments that won't be paid off when you buy the new home.

You can then basically take the going mortgage rate for your state that is reporting and use that to plug into a house affordability calculator (such as one of the Fool calculators) to see how much of a 30-year FRM you can afford, such as the "How much home can you afford?" calculator referenced by this page: You can play a number of what-if's and read about mortgage advice at

Also, The "Buying or Selling a Home" board <> is frequented by a couple mortgage lenders that can speak authoratively about mortgages, which is a good source for information.

Another good source of general information is The Mortgage Professor: and, if I recall correctly, it also has a Home Affordability calculator.

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