Many potential buyers take the extra step of seeing if they are pre-approved or pre-qualifyed for a loan, which is a good decision to make. There is a huge difference between the two. Those that pre-qualify for a loan are given an amount that the lender will give them to purchase a home. This usually takes weeks to receive, as lenders will evaluate your debt to income ratio and if you can afford a certain monthly payment.
Being pre-approved means that you have this money in hand and can begin to negotiate with the sellers and real estate agents. This usually involves paying a fee to get this information, however, it does help make things run much faster and smoother.
Having a good FICO score means that you can qualify for a better loan. FICO scores take into consideration your past borrower history and can range in the low 300 range or can be above 720. To understand just how much FICO scores can affect a [mortgage rate](http://mortgages.nationalrelocation.com/, consider a person with a 620 rating that takes out a mortgage for $215,000, the rate would be 7.60%. Now if that person had a rating of 720, the rate would fall to 6%.
So how can you make sure that you get a good rate? The best way is to clean up your credit history about six months before you decide to take the plunge into the housing market. Maintaining a debt ratio income of less than 36% will help to boost your FICO score by as much as 10%. Your goal should be to make sure that your credit history is as upbeat and clean as possible.