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Why You Should Start the Homebuying Process with a Pre-approval

You know you want to purchase a home—and that is so exciting! We feel your energy, we really do. But before you start looking online or driving around neighborhoods in search of your dream home, you need to get your ducks in a row and prevent unpleasant surprises that can delay the lending process.

As exciting as it is to look for—and find—a new home, there can be some surprises along the way. Not all of these surprises are fun, and the last thing you want to do is get your heart set on your perfect home only to realize you can’t qualify for the loan.


We’ve seen it happen time and again. No matter how confident you are of your finances, you have no way of knowing what you qualify for until you jump into the loan application process. This is why it’s so critical to start the homebuying process with a pre-approval. The time, money, and stress you’ll save yourself are invaluable!

What is a Pre-approval?

A pre-approval is a tentative commitment from your lender for a mortgage loan. This commitment comes in the form of a letter stating how much money the bank is willing to lend you for a home, and it means that the lender has verified your credit, income, down payment, and more. You can then show that letter to home sellers when you’re making an offer. A pre-approval can help give sellers confidence in your offer and that you can, in fact, afford to buy their home.

Why Get a Pre-approval?

When you start the homebuying process with a pre-approval, you’re going in with your eyes wide open. That’s because a pre-approval takes the guesswork out of buying a home.

The benefits of a pre-approval include:

  1. Knowing you can get a loanwithout a pre-approval, you don’t know for certain that you can get a loan. A pre-approval verifies a lender’s willingness to give you a mortgage based on your financial situation.
  2. Knowing how much home you can affordyou can waste precious time, energy, and resources searching for a home that may not be within your price range. On the other hand, if you start the homebuying process with a pre-approval, you may come to find you can afford more home than you imagined!
  3. Understanding what your monthly payment will bethe overall cost of a home is one thing. That number may look doable, or it may look scary. In either case, the number that you really want to focus on is how much your monthly payment will be, including taxes and insurance. With a pre-approval, you gain a sense of what the next 30 years (or however long you plan to stay in your home) will look like in terms of payments. You can then adjust your price range up or down depending on what number you’re comfortable with.
  4. Saving timea pre-approval allows you to focus specifically on homes within your price range. You can spin your wheels for months on end looking at homes that may not be realistic for your budget. If you start the homebuying process with a pre-approval, you may also save time during negotiations and closing. This is because you’re able to confirm to the sellers that you can afford this house. Having worked with a trusted loan advisor on your pre-approval, you’ll also know what to expect during closing and prevent possible surprises, which can speed up the process.
  5. Having an opportunity to review your financial situationyou would not likely get a pre-approval simply to have a financial well-being check, but it is a major benefit. The pre-approval process will take into account all your assets and income, all your debts and obligations, and your credit report. This process will allow you to address any errors on your report, which could hinder your ability to purchase a home. If the amount you’re pre-approved for is less than you imagined, this also gives you the opportunity to discuss actionable steps you can take to improve your chances of getting pre-approved for your ideal amount.
  6. Saving moneystart the homebuying process with a pre-approval and you’ll know upfront what costs you’ll be responsible for. No surprises later! Many buyers understand the sticker price on the home. What they don’t take into consideration are the fees and costs associated with the actual homebuying process. Since the pre-approval includes an estimate of all these costs, such as title insurance and escrow fees, you’ll be prepared for what happens after your offer is accepted.
  7. Having a more competitive offera pre-approval letter helps confirm the validity of your offer. It lets the seller know you mean business and you’re here to play. With interest rates and housing inventory as low as they are, the homebuying process has gotten ultra-competitive. This is especially true in secondary suburban cities that may offer more square footage, spacious yards, access to the outdoors, and lower housing prices than expensive metros. When you start the homebuying process with a pre-approval, you also give yourself some buying power. You may find you have more leverage and room to negotiate—not just on price, but on closing costs, move-in date, improvements, furnishings, and more—if you have that trusty pre-approval letter in your pocket.

Ready to Get Started?

Let’s face it. Anyone can say they’d like to buy that house. They may even be so enthusiastic about it that they offer above the asking price. That’s all great…but can they back that offer up? The only way to do that (aside from buying a home in all cash) is with a pre-approval.

If you start the homebuying process with a pre-approval, you’re already ahead of the game because you’re searching within your price range, prepared for the costs and fees associated with buying a home, and are able to submit an offer backed by your pre-approval letter. It’s also the best way to help ensure that the loan process goes smoothly.

Ready to jump into the pre-approval process? We’re right there with you! Find an APM Loan Advisor near you today. In the meantime, you can read more about how to get pre-approved here.


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