Mortgage prequalification is a simple process that uses your income, debt, and credit information to let you know how much you may be able to borrow. Getting prequalified before you shop for homes can help you:

• Focus your search — Establishing  your price range up front means you can target the right homes in your search.
• Move forward confidently — When it's time to make an offer, you'll have the confidence of knowing you can back it up.
• Know your options — Seeing the loan amount, interest rate, and monthly payment you could qualify for means you'll be able to make the mortgage decision that works best for you. 

If you're buying a home, it's highly recommended that you obtain a property inspection and make your purchase offer contingent on the findings of the inspection.

There is a difference between a property inspection and an appraisal. An appraisal is required by most mortgage lenders in order to support the value of the real estate and the terms of the mortgage agreement.

Prequalification and preapproval actually have more similarities than differences:

• Neither comes with any fees or obligations.
• Neither one is a commitment to lend.
• Both provide an estimate of how much you could borrow to buy a home.
• Both base that estimate on factors like your debt-to-income ratio, how much you have for a down payment, and your credit history.

The key difference is that a preapproval is a more accurate and reliable estimate based on a more complete view of your credit. That's because when you prequalify, we perform a "soft" credit inquiry, which gives us information about your credit history and monthly debts, but this doesn't provide as much detail as a "hard" credit inquiry, which is required for a preapproval.

Your preapproval also comes with a PriorityBuyer^SM Preapproval Letter that you and your agent can give to sellers when you make an offer, so they know you're a serious buyer.

If you're not sure which option is right for you, start by getting prequalified online. It only takes a few minutes, and afterward you can easily take the next step and let us know you'd like to get preapproved.

Many people start by determining what they can afford as a monthly payment. A common starting point is to calculate 25% of your gross monthly income to help determine a manageable monthly mortgage payment.

• Learn more about determining your monthly payment
• Wells Fargo home price range calculator

Interest rates are influenced by the financial markets and can change daily – or multiple times within the same day. The changes are based on many different economic indicators in the financial markets. View our current interest rates.

Your monthly mortgage payment typically will include principal and interest on the mortgage, as well as homeowners insurance and property taxes if your mortgage payment includes escrow. Depending on your down payment and loan type, you may also have to pay private mortgage insurance as part of your monthly mortgage payment.

• Watch a video on the components of a mortgage payment
• Learn more about escrow