Why Pre-Approval Is More Important Than Ever This Spring

Why Pre-Approval Is More Important Than Ever This Spring

What Is Pre-Approval?

Pre-approval gives you an estimate of how much a lender is willing to loan you for a home. To determine this, lenders review your financial history, including:

• Debt-to-income (DTI) ratio – The lower your DTI, the more you may be able to borrow.

• Income and employment – Lenders check for steady income to ensure you can repay the loan.

• Credit score – A higher score can increase the amount you qualify for.

• Payment history – Consistently paying bills on time shows you’re a reliable borrower.

Once reviewed, you'll receive a pre-approval letter stating your borrowing limit. This not only boosts confidence in your home search but also helps streamline the closing process.

It Helps You Set Your Budget

Spring’s real estate market is competitive, and emotions can run high, especially in bidding wars. Having a clear budget helps you avoid overextending yourself. As Freddie Mac explains:

“​Keep in mind that the loan amount in the pre-approval letter is the lender’s maximum offer. Ultimately, you should only borrow an amount you are comfortable repaying.”

So, take this time to carefully review your finances. Be sure to include other homeownership expenses—such as property taxes, insurance, and possible homeowner’s association fees—to determine what fits within your budget.

Next, work with your agent to focus your search on homes that align with your financial limits. This way, you won’t risk getting attached to a property that stretches beyond what you can comfortably afford.

It Helps Your Offer Stand Out in a Competitive Market  

Spring buyers aren’t just vying for homes—they’re also competing for the seller’s attention. A pre-approval letter can give you an edge by demonstrating that you’ve already been financially vetted. As Zillow puts it:

“Having a pre-approval letter handy while you’re shopping for a home can also help you act quickly once you’ve found a home you love. The letter shows potential sellers that you’re a serious buyer who has the financial means to close on the home. In a competitive market, an offer with a pre-approval letter attached will stand out among other offers that don’t include one — increasing the chances of your offer being accepted."

That means when sellers are choosing among multiple offers, yours could rise to the top simply because you’ve already taken this step.

And one last piece of advice: Once you have your pre-approval letter, be mindful of any financial changes. Avoid switching jobs, taking on new credit cards or loans, co-signing for others, or making large transfers in and out of your savings. Any shifts in your finances could impact your pre-approval status.

Bottom Line

If buying a home is on your radar this spring, securing pre-approval should be your top priority. It helps you determine your budget, signals to sellers that you’re serious, and prevents you from getting attached to a home that’s beyond your means. Connect with a lender to get started.

How do you plan to stand out in today’s competitive market? Let’s talk about how to position yourself for success.