It’s no secret that buying a home is one of the biggest financial decisions most people will ever make. While the process can be exciting, it can also feel overwhelming at times—especially when it comes to financing. How exactly do you buy a home? Well, this is where mortgage pre-approval comes in! Getting pre-approved for a mortgage before you start house hunting is a critical step that can save you time, frustration, and (most importantly) money.

What is Mortgage Pre-Approval?

Mortgage pre-approval is a process in which a lender reviews your financial situation—credit score, income, debts, and assets—to determine how much they are willing to lend you. Unlike pre-qualification, which is a more informal estimate, preapproval provides a conditional commitment from the lender, giving you a clear budget for your home search.

The Benefits of Getting Pre-Approved

• Know Your Budget - One of the biggest advantages of getting preapproved is understanding exactly how much home you can afford. Without preapproval, you might waste time looking at homes outside your price range. On the flip side, your preapprovals can stop you from underestimating just how much home you can afford! The last thing you want to do is underestimate your buying power and miss out on your dream home.

• Gain A Competitive Edge in the Market - In competitive real estate markets, homes can receive multiple offers within days—or even hours. Sellers are more likely to take your offer seriously if you have a pre-approval letter because it shows you are a serious buyer with the financing ready to back your offer.

• Identify and Fix Financial Issues Early - Preapproval helps uncover potential issues with your credit, debt-to-income ratio, or other financial factors before you get too far into the process. If there are any red flags, you can take steps to improve your financial standing before making an offer on a home! It’s all about finding the right home for you at the right time. 

• Speed Up The Closing Process - Once you find your dream home, having a preapproval in place can help speed up the mortgage approval process. Since the lender has already reviewed most of your financials, finalizing the loan is often much quicker than if you make the offer before knowing how much you can actually afford.

Pre-Approval vs. Pre-Qualification

Pre-qualification is a quick, informal assessment of how much you may be able to borrow, based on self-reported financial information. Pre-approval is a more thorough process where the lender verifies your financial details and provides a conditional commitment for a specific loan amount.

How To Get Pre-Approved

If you’re ready to start the home-buying process, here’s what you need to do to get preapproved:

• Check Your Credit Score – Lenders use your credit score to determine your loan eligibility and interest rate.
• Gather Financial Documents – This includes pay stubs, tax returns, bank statements, and information on any debts you have. Lenders may ask for:

- W-2s from the last two years 

- Tax returns from the last two years

- Recent pay stubs

- Current bank statements

- Investment accounts (if applicable)

• Shop Around for Lenders – Not all mortgage lenders offer the same rates and terms, so getting quotes from multiple lenders can help you find the best deal. Make sure you check with your agent and see if they have a preferred lender they work with - Sometimes these preferred lenders will be able to offer you incentives for working with them through your agent.
• Submit an Application – Once you choose a lender, submit your application along with the required documents for review.

Final Thoughts

Getting preapproved before you start house hunting is a smart move that can streamline the home-buying process. Not only does it give you a clear financial picture, but it also makes you a stronger buyer in a competitive market. If you’re serious about purchasing a home, take the time to get preapproved—it will be worth it in the long run.