One Homebuying Step You Don’t Want to Skip: Pre-Approval
Teagan Olivieri
Monday, June 16, 2025
If you’re getting ready to buy a home, there’s one essential step you can’t afford to overlook: pre-approval. Here’s what it is and why it’s more important than ever in today’s market.
What Is Pre-Approval?
Pre-approval is like getting a green light from a lender. It tells you how much they’re willing to lend you for your home purchase. To determine that amount, a lender reviews your financial history. According to Realtor.com, here are some common documents a lender may ask for during this process:
Once they review these, you’ll receive a pre-approval letter showing the amount you can borrow. It’s important to note that any changes in your financial situation after getting pre-approved can affect your status. So, hold off on making major financial moves like changing jobs, applying for new credit cards, or withdrawing large sums from your savings after you get the letter.
How Pre-Approval Helps You Determine Your Borrowing Power
With home prices on the move and mortgage rates in flux, it’s more crucial than ever to understand your borrowing limits. The pre-approval process is an excellent opportunity to discuss your home loan options with a lender and how the current rates will impact your monthly payments.
Knowing your pre-approval amount helps you set a clear budget and tailor your home search to properties you’re comfortable with financially. This means you won’t waste time falling in love with homes that are outside your price range, helping you stay within your budget.
How Pre-Approval Helps You Stand Out
Once you’ve found your dream home, pre-approval can be a game-changer. It not only strengthens your offer but also shows the seller you’re a serious buyer. Pre-approval gives you an edge over other buyers who haven’t been through the process yet.
As Greg McBride, Chief Financial Analyst at Bankrate, puts it:
“Pre-approval carries more weight because it means lenders have actually done more than a cursory review of your credit and finances, but have instead reviewed your pay stubs, tax returns, and bank statements. A pre-approval means you’ve cleared the hurdles necessary to be approved for a mortgage up to a certain dollar amount.”
Bottom Line
If you’re planning to buy a home, getting pre-approved should be one of your first steps. It not only helps you understand your borrowing power but also gives you a competitive edge when it comes time to make an offer. Reach out to Team Olivieri today, and let’s get you started on the right path toward homeownership!
What Is Pre-Approval?
Pre-approval is like getting a green light from a lender. It tells you how much they’re willing to lend you for your home purchase. To determine that amount, a lender reviews your financial history. According to Realtor.com, here are some common documents a lender may ask for during this process:
- W-2s from the last two years,
- Tax returns from the last two years,
- Pay stubs from the last 30 days,
- Bank statements from the last 60 days,
- Investment account statements (if applicable),
- Two years of history of where you’ve lived.
Once they review these, you’ll receive a pre-approval letter showing the amount you can borrow. It’s important to note that any changes in your financial situation after getting pre-approved can affect your status. So, hold off on making major financial moves like changing jobs, applying for new credit cards, or withdrawing large sums from your savings after you get the letter.
How Pre-Approval Helps You Determine Your Borrowing Power
With home prices on the move and mortgage rates in flux, it’s more crucial than ever to understand your borrowing limits. The pre-approval process is an excellent opportunity to discuss your home loan options with a lender and how the current rates will impact your monthly payments.
Knowing your pre-approval amount helps you set a clear budget and tailor your home search to properties you’re comfortable with financially. This means you won’t waste time falling in love with homes that are outside your price range, helping you stay within your budget.
How Pre-Approval Helps You Stand Out
Once you’ve found your dream home, pre-approval can be a game-changer. It not only strengthens your offer but also shows the seller you’re a serious buyer. Pre-approval gives you an edge over other buyers who haven’t been through the process yet.
As Greg McBride, Chief Financial Analyst at Bankrate, puts it:
“Pre-approval carries more weight because it means lenders have actually done more than a cursory review of your credit and finances, but have instead reviewed your pay stubs, tax returns, and bank statements. A pre-approval means you’ve cleared the hurdles necessary to be approved for a mortgage up to a certain dollar amount.”
Bottom Line
If you’re planning to buy a home, getting pre-approved should be one of your first steps. It not only helps you understand your borrowing power but also gives you a competitive edge when it comes time to make an offer. Reach out to Team Olivieri today, and let’s get you started on the right path toward homeownership!
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