There are many reasons but lets stick to the most important ones.
First Pre-qualified or Pre-Approved allows you to set your expectations and limits when selecting your home. You may qualify for more than you want to spend, but it is always good to know you have that edge available.
Being Pre-Qualified or Pre-Approved can be used as a negation point, when writing a contract offer. Pre-Approval offers a better negotiation point, but a contract offer, that has a documented pre-qualify or pre-approval letter, will normal be accepted over contract where nothing has been documented. This puts at ease, the sellers mind that the contract will not go bust at the last minute due to financial issues associated with the purchasers credit or buying power.
Many home sellers will not even accept any contracts where there is not some type of pre-qualified/approved
Early documentation saves time later. It sets in motion all of the documentation and collection of information early and saving time later on.
Allows time to correct minor credit issues. Assuming that something should show up that you did not expect, it allows you to alter your plans and correct those issues prior to proceeding.
Note: that even with less than perfect credit, you will many times still be approved. However, there is ultimately at a cost, and this cost is reflected in requiring a higher down payment, higher interest rates and or higher closing costs.
For complete and accurate information I will put you in touch with a mortgage specialist.
Click here to be put in touch with a mortgage specialist