First step, biggest step: The pre-approval process

So you’ve decided to buy a home. Congrats! Now what?

The first thing you’re going to do is get a pre-approval. This determines how much money you’ll be able to borrow and your loan program options. Once you know how much money you CAN spend, you can then sit down and determine how much you WANT TO spend.

It’s easy to understand why this step is so important––imagine leaping into the home search and finding “the one,” only to realize that 1) your real estate agent needs that pre-approval to make an offer; and 2) that house is way, way out of your budget. Talk about a heartbreak.

Pre-approval vs. pre-qualification: what’s the difference?

A long answer made short: a pre-approval and a pre-qualification both mean that your mortgage lender has reviewed your information and believes you’re good for the money. But here’s the big difference: a pre-approval is a letter stating that an underwriter has reviewed your income, credit, and asset documentation, which gives you more negotiating power and can be considered as good as a cash offer. A pre-qualification doesn’t include the review of any documentation, and it and it doesn’t hold as much weight.

Set an appointment with a mortgage loan officer and take the first step toward homeownership: getting pre-approved!