On One Hand

The short answer is right after you choose your agent (see my blog ).

Getting pre-qualified means speaking with a Loan Officer about your income and expenses and job history and credit rating and available cash. The Loan Officer then tells you what your maximum purchasing price is and what your closing costs will be.

Getting pre-approved means all of that plus the Loan Officer independently verifies your employment, credit rating, expenses, and cash. At the end of this process you will receive a Pre-approval Letter which will accompany any offer you submit.

Don’t even bother with getting a pre-qualification. No competent agent puts any faith in them and you need to know what your top number is – no ifs, ands, or buts. This is one way we keep you stress level down and your negotiating position strong. This can mean that you get a highly sought after property and the other buyer doesn’t – or that your offer is taken more seriously. I’ve seen multiple offer cases in which the higher offer didn’t get the property because the other agent didn’t "sell" his buyer as well – didn’t make a strong enough case that his buyer is the kind of buyer who you won’t regret being in escrow with. Having a really credible pre-approval letter is central to leveraging your power to the max.

On a related point, don’t switch lenders midstream. This totally trashes out your credibility in the transaction. You should pick your lender as carefully as you pick your agent. Most Loan Officers aren’t that competent/ethical – just like Realtors. Pick the lender based on past performance, professionalism, connections, and references. Do not pick your lender based on rate and point quotes. Doing so sets you up to be "blue skied". When you pick the right lender you will get the best available rate and points.