If you’re planning to buy a home, getting pre-approved for a mortgage is one of the smartest first steps you can take. Not only does it help you understand how much you can afford, but it also shows sellers that you’re a serious buyer. Here’s a simple, step-by-step guide to getting pre-approved.
Step 1: Check Your Credit Report
Before applying, review your credit score and history. A higher score can mean better loan terms. If there are errors on your report, dispute them early to avoid delays.
Step 2: Gather Your Financial Documents
Lenders will need documentation to verify your income, assets, and debts. Be prepared with:
- Recent pay stubs
- Tax returns and W-2s (or 1099s if self-employed)
- Bank statements
- Records of debts like credit cards, student loans, or car loans
Step 3: Determine Your Budget
Think about how much you’re comfortable spending each month—not just what a lender says you qualify for. Factor in property taxes, insurance, and potential maintenance costs.
Step 4: Shop Around for Lenders
Not all lenders are the same. Compare interest rates, fees, and loan programs. Even a small difference in rates can save you thousands over the life of your loan.
Step 5: Submit Your Application
Once you choose a lender, you’ll submit your application and financial documents. The lender will review your credit, income, and debt-to-income ratio to determine how much you’re pre-approved for.