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Spring is here, and so is the busiest season in real estate. More buyers are out looking for homes, which means more competition for you. If you want to put yourself in the best position to buy, there's one step you can't afford to skip, and that's getting pre-approved for a mortgage.
Some buyers think they can wait until they've found a home they love before talking to a lender. But in a season where homes can sell fast, that's a risky move. Getting pre-approved before you start your search is a much better bet.
Here's what you need to know about this early step in the buying process.
What Is Pre-Approval?
Pre-approval gives you a sense of how much a lender is willing to let you borrow for your home loan. To determine that number, a lender starts by looking at your financial history. Here are some of the things that can have an impact, according to Yahoo Finance:
- Your debt-to-income (DTI) ratio: This is how much money you owe divided by how much money you make. Usually, you can borrow more if you have a lower DTI.
- Your income and employment status: They're looking to verify you have a steady income coming in – that way they feel confident in your ability to repay the loan.
- Your credit score: If your score is higher, you may qualify to borrow more.
- Your payment history: Do you consistently pay your bills on time? Lenders want to know you're not a risky borrower.
After their review, you'll get a pre-approval letter showing what you can borrow. Having this peace of mind is a big deal – it helps you feel a lot more confident in your ability to get a home loan. And the fringe benefit is it can also speed up the road to closing day because the lender will already have a lot of your information.
It Helps You Figure Out Your Budget
Spring is a competitive season, and emotions can run high if you find yourself up against other buyers. Having a firm budget in mind is so important. You don't want to get too attached and end up maxing out what you can borrow. As Freddie Mac explains:
"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."
So, use this time to really buckle down on your numbers. And be sure to factor in other homeownership costs – like property taxes, insurance, and maybe even homeowner's association fees – so you know what you can comfortably afford.
Then, partner with your agent to tailor your search to homes that match your budget. That way, you don't fall in love with a house that's out of your financial comfort zone.
It Helps Your Offer Stand Out During the Busy Season
Spring buyers aren't just competing for homes. They're competing for the seller's attention, too. And a pre-approval letter can help you stand out by showing sellers you've already gone through a financial check. Zillow explains it like this:
"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."
That means when sellers are choosing among multiple offers, yours could rise to the top simply because you've already taken this step.
And here's one final tip for you. After you receive your letter, avoid switching jobs, applying for new credit cards or other loans, co-signing for loans, or moving money in or out of your savings. That's because any changes to your finances can affect your pre-approval status.
Bottom Line
If you're thinking about buying a home this spring, getting pre-approved should be your first move. It'll help you understand your budget, show sellers you're serious, and keep you from falling in love with a house that's out of reach. Talk to a lender to get started.
What's your plan to stand out in this competitive market? Connect with an agent to make sure you're fully ready to buy.
Source: Keeping Current Matters 3/26/25
