If you’re getting ready to buy a home, one of the first things you’ll hear is that you need to get preapproved. But what does that actually mean — and how is it different from being prequalified? And what about a loan commitment letter, or being pre-underwritten?

These terms get used interchangeably, but they are not the same thing. The difference matters — especially in a competitive market where sellers are evaluating the strength of every offer on the table.

Here’s a simple breakdown of each level and what to look for. [Read more…]