Step 3 to Buying a Home: Get Pre-Approved

Getting pre-approved is the first real step in looking for a home. It’s a great task to finish before you ever start touring houses.

Hi, I’m Josie Sommers, a real estate agent with Coldwell Banker Realty. This is part three of my ten-part series on the steps to buying a home. In Step 1, you checked your credit. In Step 2, you figured out your budget. Now it’s time to find out what a lender will actually do for you.

What Is a Pre-Approval?

A pre-approval is when a lender looks at your income, savings, debts, and credit, then tells you the most they’re willing to lend you for a home. You’ll usually get a pre-approval letter you can show sellers when you make an offer.

Here’s how it fits with Step 2: your pre-approval sets the ceiling, and your budget decides where you land under it. Just because a lender approves you for a certain amount doesn’t mean you have to spend all of it.

You may also hear the term pre-qualified. A pre-qualification is usually a quick estimate based on what you tell the lender. A pre-approval goes further, because the lender actually checks your information, so it carries more weight with sellers.

Why Get Pre-Approved Before You Start Looking?

Many sellers won’t take an offer seriously without a pre-approval letter. If you find a home you love, you want to be ready to make a strong offer right away.
It keeps your search in the right price range. Your pre-approval gives you a clear guideline for what homes to look at.
It protects you from heartbreak. Falling in love with a house you can’t make an offer on yet is a tough feeling.

My dad and I don’t require buyers to be pre-approved before we show them homes. But we strongly, strongly advise it, because we’d hate to see someone get attached to a home they love and lose it because they weren’t ready.

Feeling Intimidated? That’s Normal

Working with a lender and gathering your information can feel like a big first step. Money talk can feel intimidating for anyone who isn’t an expert in that area of their life.

The good news is that many lenders work hard to make the process as easy as possible, and you don’t have to figure it out alone. I’m happy to connect you with a lender I trust, like David Lozinski with First Equity Mortgage, who I’ve mentioned in my earlier posts. You’re always free to choose your own lender, too.

Your lender will give you an exact list, but they’ll typically ask for things like:

Recent pay stubs
Tax returns or W-2s
Recent bank statements
A photo ID
Permission to check your credit

Also keep in mind that a pre-approval letter is usually only good for a limited time, so ask your lender how long yours lasts and when it may need to be updated.

What NOT to Do After You’re Pre-Approved

Once you’re pre-approved, it’s exciting. I know a lot of people want to start decorating or celebrating right away. But hold off on any major purchases until your closing is done.

Keep your money where it’s supposed to be. If you don’t have the funds you told your lender you’d have, it can actually mess up your closing.
Don’t take on new debt. Financing new furniture or a car can change your credit and debt, and many lenders re-check both right before closing. A new payment could lower your approval, or even put your loan at risk.
Talk to your lender before any big money move. When in doubt, ask first.

The new couch can wait a few weeks. The keys to your home are worth it.

Your Step 3 Checklist

Choose a lender and reach out before you start touring homes.
Gather your pay stubs, tax returns, bank statements, and ID.
Get your pre-approval letter in hand.
Compare your pre-approval amount to the budget you set in Step 2.
Ask how long your pre-approval is good for.
Avoid big purchases and new debt until after closing.

Ready to Get Pre-Approved?

If you’re thinking about buying your first home and want help getting started with a lender, I’d love to help. There’s no pressure and no question too basic. Reach out anytime.

Next week in the series: Step 4 of buying a home.

Catch Up on the Series

Step 1: Check Your Credit Score
Step 2: Figure Out Your Budget

Call or Text Josie

Helping first-time buyers in:

Lakeville
Prior Lake
Shakopee

Josie Sommers, Coldwell Banker Realty
Call or text: 952-454-8504
josie.sommers@cbrealty.com