Pre-approval, as opposed to pre-qualification, signifies that the loan application has been taken through a rigorous procedure. Here's why pre-approved buyers are ahead in the home buying game:
If you make an offer on a home and then apply for a loan, you are at the lender’s mercy, who is aware that you do not have time to shop around. Shopping around prior to making an offer to find your best deal is smart. Your credit score will go down slightly with the first credit check done. After that you can check with a few more lenders with an additional hit to your credit score.
Pre-approval saves time spent looking at houses you can’t afford.
A pre-approval letter from a lender gives you an edge when multiple offers have been made on a house. This is important in a sellers' market like we are currently experiencing!
Pre-approved buyers can generally close escrow more quickly, since most of the work has already been done.