All over country, more renters are buying and homeowners are upgrading their properties. In this hot seller’s market, a preapproval letter from your mortgage lender can help you secure a winning bid on home of your dreams.

More detailed than a prequalification. Actual paperwork and credit checking process A preapproval involves much more than filling out a questionnaire. It is essentially going through entire mortgage application process and having lender give you an exact figure of how much money they are willing to lend you and at what interest rate.

Having letter is like having cash in bank. This shifts your focus from financing to getting best real estate agent and finding best home that you can afford.

Pay attention to terms of letter before you start shopping for your home: What terms did your mortgage lender extend?

A simple prequalification where they took down your information and made an informal guess of what type of loan you will receive is usually not very effective. This basic prequalification of course is subject to running a full credit check, full disclosure of your assets, and no drastic changes in your financial situation.

Depending on how long it takes you to find a home and come back to application process, pay special attention to your finances. Any lapsed payments on credit cards, student loans or a job change, can give your mortgage lender sufficient reasons to back out of deal.

Your finances get a second look Even if you are dealing with your current mortgage lender, you have to fill out some kind of paperwork to let them know that you want to refinance and get everything started. In most cases, lender will take a second look at your entire financial picture.

You have to provide your payment history, proof of income, list of all outstanding debt, credit report, current loan amount, loan rate and reasons for wanting to refinance your loan. If you have a high interest rate because of past credit problems, you can still qualify for home mortgage refinancing.