One Homebuying Step You Don’t Want To Skip: Pre-Approval

If you’re planning to buy a home, there’s one crucial step you shouldn’t overlook: getting pre-approved for a mortgage. Here’s what pre-approval is, why it’s important, and how it can set you up for success.

What Is Pre-Approval?

Pre-approval is like getting a head start in the homebuying process. It’s when a lender reviews your financial history and determines how much they’re willing to let you borrow. You’ll need to provide documents such as:

• W-2s from the last two years

• Tax returns from the last two years

• Pay stubs from the last 30 days

• Bank statements from the last 60 days

• Investment account statements (if applicable)

• A two-year history of where you’ve lived

Once approved, you’ll receive a pre-approval letter showing your borrowing power. Keep in mind that changes in your finances — like switching jobs or opening new credit cards — can impact your pre-approval, so it’s best to hold off on major financial moves during this time.

How Pre-Approval Helps You

1. Know Your Borrowing Power
With home prices and mortgage rates fluctuating, affordability can be tight. Pre-approval helps you:

• Understand your maximum loan amount.

• Set a realistic budget for your home search.

• Avoid falling in love with homes outside your financial comfort zone.

2. Make Your Offer Stronger
When you’re ready to make an offer, pre-approval shows sellers that you’re a serious buyer. Sellers are more likely to choose your offer over others because they know you’ve already undergone a detailed financial review. As Greg McBride, Chief Financial Analyst at Bankrate, explains:

“A pre-approval means you’ve cleared the hurdles necessary to be approved for a mortgage up to a certain dollar amount.”

Bottom Line

Pre-approval isn’t just a helpful step; it’s a game-changer. It gives you confidence in your budget, helps you focus your search, and makes your offer stand out to sellers.

Ready to get started? Connect with a trusted lender today to begin the pre-approval process and take the first step toward your dream home.

Finding ways to make your credit score better could help you get a lower mortgage rate. When you’re ready to get the process started, let’s connect.