Pre-approval, on the other hand, is a formal process where the lender examines your finances in greater detail and agrees in advance to a loan amount and terms. This requires that a credit report be pulled from one of the credit repoting agencies. One advantage to this process is that when the mortgage banker has full knowledge of your situation, many more possibilities may prove to be available that will ultimately lead to you getting as close as possible to owning your dream home. Another advantage to having pre-approval is that it makes a contract offer stronger. All things being equal, a seller would likely consider more seriously an offer from someone who is pre-approved because it’s less risky.It’s so much better to know the reality of your situation, than to be guessing about it!