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Usually yes, with two caveats. First, fully fund an emergency reserve and capture any employer 401(k) match before accelerating payoff, because mortgage prepayments are illiquid. Second, compare the mortgage rate to the expected after-tax return on alternative uses of the cash. At 6.5% with no itemized deduction (most filers take the standard deduction now), prepayment is a guaranteed risk-free return that competes well with equities.

For conventional conforming loans, top pricing tiers begin at 740 FICO and improve again at 760 and 780. Below 740 you pay loan-level price adjustments (LLPAs) that raise the rate or closing costs. FHA accepts scores as low as 580 (3.5% down) or 500 (10% down) but carries mandatory mortgage insurance. The highest-leverage prep move is paying down credit card balances 30–60 days before applying so reported utilization drops below 30%.

Twenty percent eliminates PMI on conventional loans and unlocks the best pricing, but it is not a hard minimum. Conventional goes as low as 3% (5% for second homes), FHA 3.5%, VA and USDA 0% for eligible borrowers. The right number depends on whether the PMI cost and larger loan payment beat the opportunity cost of the cash you would otherwise put down.

Prequalification is informal and based on self-reported numbers. Preapproval involves an actual credit pull and verification of income and assets; the lender issues a letter stating a maximum loan amount. Sellers in competitive markets expect a preapproval letter with every offer.