If a pre-approval or pre-qualification is less than a full loan commitment, why should buyers bother? Here's why:

By speaking with a lender you can get an informed idea of how much you can afford, which homes are in your price range, and which loan programs might be best for you. This is important information

On the basis of your meeting, the lender can provide a "pre-approval" or "pre-qualification" letter suggesting in broad terms that you can likely qualify for "x" financing dollars.

There will be a caveat saying that the letter does not represent an actual loan commitment because the lender reserves the right to review the appraisal, verify credit and employment information, and take such other steps as it feels are necessary to reduce risk. Because they are less than absolute loan commitments, such missives are often called "hand-holding" letters.

By pre-qualifying or getting pre-approved you demonstrate to brokers and sellers that you're serious and that you have a good idea of what you can afford. For sellers, an offer from someone who has pre-qualified or sought pre-approval is to be preferred over an offer from someone who has never met with a lender and thus has little idea of what might or might not be affordable.

For additional information, speak with local brokers and lenders. As well, here are three good books that can help you in the marketplace:

• "The Homebuying Game: A Quick and Easy Way to Get the Best Home for Your Money," by Julie Garton-Good (ISBN: 0793116465)

• "The Home Buyer's Kit : Finding Your Dream Home, Financing Your Purchase, Making the Best Deal, Gaining Tax Benefits," by Edith Lank (ISBN: 0793126657)

• "The Language of Real Estate," by John W. Reilly (fourth edition, ISBN: 0793105838)

Question Of The Week

Q We have just moved into a new development and in speaking with our neighbors were shocked to find out that their closing costs were several thousand dollars lower than our expenses. How did they get a better deal?

A The difference in closing costs may be surprising, but it may also be reasonable. In fact, it's entirely possible that your neighbors did not get a "better" deal, only a different one.

For example, suppose you have a loan with 1 point and your neighbor has a loan of the same size and no points -- but a higher rate. Your closing costs would be steeper, but your monthly expense would be lower.

Or, it could be that your neighbor negotiated a deal which required the builder to pay more closing costs than you were able to extract -- but maybe you got other benefits (that better rec room or perhaps those nicer kitchen cabinets).

You're right to ask about the difference in closing costs, but you must also look at how the properties compare and the overall features of each transaction before concluding that one deal was better than another.

Weekly Resource

Every few years a newspaper invests enormous sums of both money and commitment and allows one or more reporters to investigate a complex subject. The efforts of The Washington Post during the Watergate affair are a classic example, and now we have a two-year study from the Pittsburgh Post-Gazette looking into the judicial system and finding that, "hundreds of times during the past 10 years, federal agents and prosecutors have pursued justice by breaking the law. They lied, hid evidence, distorted facts, engaged in cover-ups, paid for perjury and set up innocent people in a relentless effort to win indictments, guilty pleas and convictions."