Spring is here, and so is the busiest season for homebuyers. With more buyers entering the market, competition is fierce. If you’re serious about purchasing a home, there’s one crucial step you can’t afford to skip—getting pre-approved for a mortgage.
Many buyers make the mistake of waiting until they find their dream home to start the mortgage process. But in a fast-moving market, that could cost you the home you love. Getting pre-approved before house hunting gives you a competitive edge and sets you up for success.
What Is Mortgage Pre-Approval?
Mortgage pre-approval is a lender’s assessment of how much you can borrow for a home loan. It’s based on an evaluation of your financial history, including:
- Debt-to-Income (DTI) Ratio – A lower DTI improves your borrowing power.
- Income and Employment – Lenders look for stable, verifiable income.
- Credit Score – A higher credit score may qualify you for better loan terms.
- Payment History – Consistently paying bills on time makes you a less risky borrower.
After reviewing your financials, the lender provides a pre-approval letter, which shows sellers that you’re a serious buyer with the means to secure financing. This not only gives you peace of mind but can also speed up the closing process.
Why Pre-Approval Matters This Spring
1. It Helps You Set a Realistic Budget
With homes selling quickly, it’s easy to get caught up in bidding wars. Pre-approval ensures you know exactly what you can afford before you start shopping. Freddie Mac advises:
“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.”
Beyond your loan amount, don’t forget to budget for additional homeownership costs, such as property taxes, homeowners insurance, and HOA fees. Working with a trusted mortgage expert can help you set a realistic financial plan before making an offer.
2. It Makes Your Offer More Competitive
In today’s competitive real estate market, sellers are looking for qualified buyers who can close the deal smoothly. A pre-approval letter signals that you’re financially ready, giving you an edge over buyers who haven’t taken this step. According to Zillow:
“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.”
When sellers are comparing multiple offers, yours could be the winning bid simply because you’ve already taken the time to get pre-approved.
3. It Speeds Up the Buying Process
With your financials already reviewed, your mortgage application moves faster once you find a home. This can be a huge advantage in a market where homes receive multiple offers within days. A smoother, quicker closing process makes you a more attractive buyer.
Key Tip: Protect Your Pre-Approval Status
After getting pre-approved, avoid making any major financial changes, such as:
- Switching jobs
- Applying for new credit cards or loans
- Co-signing for another loan
- Moving large sums of money in or out of your savings
Any significant financial shifts can impact your loan eligibility, so it’s best to keep your finances stable until closing.
Ready to Buy? Let’s Get Started!
If you’re planning to buy a home this spring, getting pre-approved is your first step. It gives you clarity on your budget, strengthens your offer, and helps you secure the home you want.
At Arbor Home Loans, we’re here to guide you through the process and make home financing simple. Contact us today to start your pre-approval and take the first step toward homeownership!