-Strengthens your offer and negotiation position- it is standard practice to submit a pre-approval letter with an offer. If a buyer has not been pre-approved, the seller will probably not take their offer seriously. Some sellers even request pre-approval letters before allowing showings of the home. They do not want to waste time with a buyer who may not be serious.
-Solidifies price range- there is no point in looking at homes that are more than you can afford. You will know exactly what you can afford and also know what to expect as far as closing costs and approximate monthly payment.
-Saves time and emotional stress- it happens all the time when someone thinks they will qualify for a home loan, but they do not. Maybe their credit was lower than expected, or their income-to-debt ratio won't get them the loan amount they want. It is better to find out right away, rather than after you have committed a lot of time searching for properties. It can be especially devastating if you have already found a home you love. Home buying is a very emotional experience.
As you can see, there are a lot of advantages to getting pre-approved. There is no cost to get pre-approved, and there is no obligation to get a loan through that company. I always recommend loan shopping once you have a house under contract to ensure you are getting a competitive rate and loan fees. It usually takes less time to get pre-approved than it takes to look at one house. When it comes time to buy a home, make sure you are prepared.