Sellers love preapproved buyers and, experts say, preapproval puts buyers in their best bargaining position. But sometimes buyers confuse preapproval and prequalified. Prequalification is the simple first step to buying a home. It gives you and your agent some parameters to work with.

You can go to any lender to get prequalified. The lender simply plugs in numbers you give him to a formula that will give you an idea of how much house you can afford. The lender makes no promises to lend you this amount of money and the lender doesn’t verify anything you tell him.

Preapproval, on the other hand, tells the buyer that the lender has examined your credit report and income and has told you the maximum you can borrow, along with an interest rate you would qualify for. Preapproval is not a promise from a lender to actually make the loan.

Many lenders also offer home buyers a commitment for a loan. This often depends on a review of the property.