If you are thinking of buying a home chances are you’ve heard the terms preapproved and prequalified thrown around. While they may seem similar, the differences in these two words are very important.

Being pre-qualified for a loan is a good first step, but it is the least guaranteed step along the way to home ownership. This term simply means that you tell a lender or real estate agent information about your credit, income, assets and debt and that person gives you a quote based on a debt-to-income ratio formula. You can actually do this for yourself, too. However, this is a no-obligation quote as your credit report is not run and the person providing the quote is doing it on good faith. It is a good idea to start shopping for a home this way to give you an idea of what you can afford.

Pre-approved is a step up from pre-qualified. For this you have to actually submit a mortgage application and the lender will run your credit. Generally you’ll have to pay a fee to the lender and he or she will give you a good faith estimate for all the necessary loan expense. With a pre-approval you can start looking for a home in a known price range and sellers will be more confident in your seriousness to buy. However, pre-approval is still not a guarantee that you’ll get the loan.

Loan commitment is the final step. A lender has to approve the house as well as your credit to issue a loan commitment. Once a loan commitment is offered though, you are on your way to buying your home.

During the past year, some states have enacted or scheduled the introduction of new regulations which apply to mortgage brokers. These have included Colorado, Massachusetts, and Alaska. Such regulations have focused on eliminating deceptive practices and requiring brokers to become registered with the government. It is also possible that additional regulations will be introduced at the federal level.

Most recently, in mid-October, the Attorney General of Massachusetts issued new regulations of this type. According to a press release issued by the Attorney General’s office on the 17th, the new regulations prohibit some types of broker and lender practices which are considered to be deceptive or unfair. Expanded regulations which apply to mortgage brokers include the prohibition of initiating a loan for which the broker does not have a “reasonable belief” the borrower will be able to repay it, and the requirement of greater disclosure by the broker regarding “no doc” and “stated income” loans. The new laws also ban brokers from brokering mortgages which are “not in the borrower’s interest” or in which the interests of the borrower and broker are conflicted.

Much earlier in the year, the state of Colorado enacted new regulations applying to mortgage brokers and required many of them (with some exceptions) to complete a process to become registered as a broker. The Rocky Mountain News published an article on the subject in January, indicating that the new law requires FBI and CBI criminal investigations, fingerprinting, a two-hundred dollar registration fee, and other requirements before someone can become registered as a mortgage broker.

The state of Alaska will bring about new mortgage broker regulations in July, 2008. According to the official State of Alaska web site, brokers and lenders will be required to become licensed and meet various requirements to do so; among other changes, a fund (supplied by lenders) will be established to help provide compensation to borrowers who fall victim to mortgage lending activities considered not to be ethical and/or legal.

New regulations are also possible in the federal government; according to an Associated Press report in late October, the Office of Thrift Supervision’s director spoke of the need for national broker registration and license requirements, so that dishonest brokers would not be able to relocate from one state to the next and continue their unethical practices. The recent sub-prime mortgage crisis, along with the related foreclosures and bankruptcies, seems likely to spur additional regulation in this field.

The important decision of buying or renting a home can have many implications. Buying a home or condominium unit offers a number of benefits versus renting with regard to independence and eventual reduction of expenses, while renting provides benefits involving maintenance, monthly/yearly cost, and relocation. Read on to learn more about how home buying compares versus renting…

Buying a home gives its occupant greater control in comparison to renting. The owner can change its exterior or interior paint color, pave the driveway, put up a television antenna, install a woodstove, or add a rooftop solar panel, all without needing approval. Buying can also give the owner potential access to the financial benefits of home equity loans and/or reverse mortgages. There is no potential that the occupant will be forced to move elsewhere because of a landlord’s decision to sell the property to someone not interested in renting it out. Buying also creates the possibility to improve the home and resell it at a greater price. Unless an interest-only mortgage is used, the homeowner eventually no longer has to make monthly payments, after the mortgage has been paid off over a number of years. This is preferable for retirement, as the mortgage payments might have ended by the time you want to retire.

On the other hand, renting offers some benefits as well. Renting a home or apartment eliminates a number of separate expenses; property taxes, some types of insurance, condominium fees, public water costs, etc. However, a substantial security deposit is usually required. It also prevents unexpected maintenance costs, provides and maintains some types of appliances, and usually eliminates the cost of removing snow and trash. The monthly and initial cost is generally less than that of buying a home, although there is no ability to eventually finish making payments. Costs are more predictable (especially if heat and/or electricity is included) and there are fewer separate bills to pay versus those involved in owning a home. It is easier to relocate to a new area when renting, as providing one month’s notice before moving out is usually much faster that waiting to sell a residence.

Overall, the choice of buying versus renting which offers the most benefits depends upon your plans for the future, your home maintenance and improvement abilities, and personal preferences regarding where and how you want to live. You will also need to compare the cost of both options, by the month, year, and long-term.