Spring has arrived, and with it comes the busiest time of year in real estate! More buyers are out searching for homes, which means more competition. If you want to stay ahead of the game, there’s one thing you can’t afford to skip—getting pre-approved for a mortgage.
Some buyers wait until they find a home they love before reaching out to a lender—but in a busy market, that can be a risky move. Homes can sell fast, and you don’t want to miss out! Getting pre-approved before you start your search puts you in a much stronger position.
Here’s why getting pre-approved early is such an important step in the home-buying process
What Does Pre-Approval Mean?
Pre-approval helps you understand how much a lender is willing to lend you for a home loan. To figure that out, they’ll take a look at your financial history. According to Yahoo Finance, here are some key factors that can make a difference:
- Your income and job status: Lenders want to see that you have a steady income so they can be confident you’ll be able to repay the loan.
- Your credit score: A higher score can help you qualify for a larger loan amount.
- Your payment history: Lenders want to see that you pay your bills on time—they’re looking for proof that you’re a reliable borrower.
Once the lender reviews everything, you’ll get a pre-approval letter that shows how much you can borrow. This gives you peace of mind and boosts your confidence in getting a home loan. Plus, it can help speed up the process when it’s time to close since the lender already has most of your info.
It Helps You Set a Realistic Budget
Spring is a competitive time in the market, and it’s easy to get caught up in the excitement—especially if you’re competing with other buyers. That’s why having a clear budget is so important. You don’t want to fall in love with a home only to stretch yourself too thin. As Freddie Mac puts it:
“Keep in mind that the loan amount in the pre-approval letter is the lender’s maximum offer. Ultimately, you should only borrow an amount you are comfortable repaying.”
Take this time to really nail down your numbers. And don’t forget to factor in extra costs like property taxes, insurance, and possibly HOA fees. That way, you’ll know exactly what you can comfortably afford.
Work with your agent to focus on homes that fit your budget. That way, you won’t risk falling in love with a place that’s outside your financial comfort zone.
It Gives Your Offer an Edge in a Competitive Market
Spring buyers aren’t just competing for homes—they’re also competing for the seller’s attention. A pre-approval letter can give you an edge by proving you’ve already passed a financial check. As Zillow puts it:
“Having a pre-approval letter handy while you’re shopping for a home can also help you act quickly once you’ve found a home you love. The letter shows potential sellers that you’re a serious buyer who has the financial means to close on the home. In a competitive market, an offer with a pre-approval letter attached will stand out among other offers that don’t include one — increasing the chances of your offer being accepted."
So when sellers are weighing multiple offers, yours could stand out just because you’ve already taken this important step.
Here’s one last tip—once you get your pre-approval letter, try to keep your finances steady. Avoid changing jobs, opening new credit cards, taking out loans, co-signing for anything, or making big transfers in or out of your savings. Even small changes can impact your pre-approval status!
The Takeaway
If you're planning to buy a home this spring, getting pre-approved should be your first step. It helps you nail down your budget, shows sellers you're a serious buyer, and keeps you from getting attached to a home that’s out of reach. Reach out to a lender to get started!
How are you planning to stand out in this competitive market? Let’s chat about how to get you fully prepared to buy!
