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Home Buying 101: Steps to Get Pre-Approved for a Mortgage
Wyatt Lovera
January 03, 2025
Why Mortgage Pre-Approval is the First Step to Your Dream Home
So, you’re ready to start your homeownership journey—exciting, right? But before you dive into home tours or start imagining your future kitchen, there’s one crucial task you need to tackle first: getting pre-approved for a mortgage.
Pre-approval is more than just a formality; it’s a smart way to optimize your home search. It gives you a clear picture of what you can afford and shows sellers that you’re serious. With your pre-approval in hand, your real estate agent can guide you toward homes that meet both your financial and lifestyle needs, keeping the process smooth and stress-free.
Step 1: Gather Your Financial Information
Before you can get pre-approved, your lender will need to understand your financial situation. This includes:
Proof of Income: Pay stubs, tax returns from the past two years, and any other income sources (freelance work, bonuses, etc.).
Credit History: Your credit score will be evaluated, so it’s good to know where you stand before applying.
Assets and Debts: Include savings, investments, and any outstanding debts like student loans or credit cards.
Having these documents ready ensures a smoother pre-approval process.
Step 2: Know Your Credit Score
Your credit score is a major factor in determining your loan terms. A higher score typically leads to better rates, so before applying, check your credit to see where you stand.
If your score is lower than expected, you can take steps to improve it, such as paying down credit card balances and ensuring all bills are paid on time. This will give you more favorable loan options and help strengthen your overall buying position.
Step 3: Find the Right Lender for You
Not all lenders are created equal, so finding the right one is key. Whether you’re considering a bank, credit union, or mortgage broker, it’s worth shopping around to compare rates and terms. Here’s what to look for:
Interest Rates: Even a small difference in rates can save you thousands over the life of your loan.
Loan Options: Some lenders specialize in certain loans, like FHA or VA loans. Make sure the lender offers what fits your needs.
Customer Service: You want a lender who’s responsive and easy to work with—this is a big decision, after all!
Next Week
Stay tuned for Part 2! We’ll cover submitting your pre-approval application, understanding your loan terms, and how pre-approval strengthens your offers.