As a realtor in Colorado, I have worked closely with many clients who are seeking to buy a home. One of the most important steps in the home buying process is getting pre-approved for a mortgage. This process can be confusing and overwhelming, but with the help of a local mortgage lender you trust, it can be a smooth and stress-free experience. In this blog post, I will provide you with some tips for getting pre-approved for a mortgage.

1. Understand the importance of pre-approval: Before you start looking for a home, it’s essential to get pre-approved for a mortgage. This process will help you understand how much home you can afford and what your monthly payments will be. This should be the first step, because let’s think about it… You wouldn’t go to the store without your wallet right? It’s very similar with home shopping. You might have a number in your head of what you think you can afford based on how much you’ve been paying for rent, but when you see how much house that gets you, it can be eye opening. Maybe your money doesn’t buy as much as you thought it would and some adjustments need to be made on what you’re looking for… or vice versa, maybe you didn’t realize that your monthly payment can afford you twice as much space as you’re in now? And just because you’re approved up to certain amount, does not mean you have to use it all. Consider what will be comfortable, and don’t over extend yourself if you don’t have to.

2. Check your credit score: Your credit score plays a critical role in the pre-approval process, and getting lower rates. It’s essential to check your credit score and address any issues before applying for a mortgage. A lender can help you repair your credit too, and typically one of the quickest impacts is paying off debt. It’s important to remember that Consumer rates are different than Mortgage rates, and the more you know and educate yourself or ask questions, the easier things will be.

3. Shop around for the right lender: When you’re looking for a mortgage lender, it’s important to shop around and find the right one for you. A good lender will provide you with excellent customer service, competitive rates, and a variety of loan options. In my experience, I have had the best luck using a local lender who knows your market. There are a TON of first time home buyer programs, and down payment assistance options that a lender has knowledge off and can help navigate you through what’s going to work for you. A good friend of mine Seth Erickson helped create a program called Front Range Heroes, here in Colorado where we share part of our commission checks with our clients, helping them pay their upfront closing costs. This program benefits all VA, Teachers, Medical Professionals and First Responders. Sometimes our clients get keys, and a check back at closing!

That’s not to say that you shouldn’t work with a bigger nationwide companies, but one of my biggest complaints in working with large corporation lenders are that sometimes you might not get the same person helping every time, they might not be as in touch with your local market as someone who lives in the area, and things can fall through the cracks, which can result in delayed closings and other headache. #shoplocal I always say…

4. Understand the difference between pre-qualification and pre-approval: Pre-qualification is a simple process that provides you with an estimate of how much you may be able to borrow. Pre-approval is a more in-depth process that involves a credit check and a review of your financial documents. Pre-approval is the better option as it provides you with a more accurate estimate of what you can afford. This also looks better to the Seller, because you’re saying “yes, I can afford this much” as opposed to “I think I can afford this much” when writing an offer.

5. Get pre-approved before making an offer: It’s important to get pre-approved before making an offer on a home. This will show the seller that you are serious about buying and that you have the financing in place to do so. And just know that a lot of times during the entire home buying process, you’ll have to submit verification, pay stubs, and other conditional things a few times… Buying a home doesn’t happen over night and a lot of things can change in the course of even a month. It can be annoying, but it’s just part of process, and when you get to move in to a home you OWN, it makes it all worth it.

6. Provide accurate information: When applying for pre-approval, it’s important to provide accurate and complete information about your finances. This includes your income, debts, and assets. Back in 2008, loans were getting approved left and right with unverified income, and we all saw how that turned out… The more honest you are about these things, the more realistic you can be when it comes to such a big commitment.

7. Don’t make any big purchases: When you’re in the process of getting pre-approved, it’s important to avoid making any big purchases. I know you want to splurge and get that new couch and TV for all the parties you’re going to hosting… But this can affect your credit score in a negative way. Then suddenly what you were approved for, might not be the same anymore. Another bonus tip: Do Not Switch Jobs during this process…. I have had clients burned by this before, thinking that taking a new job with better pay is the smart move… But it’s a different industry, and now underwrites tell you that you no longer have 2 years of verifiable income… wait for the keys to switch. Please.

8. Understand the costs: There are costs associated with getting pre-approved for a mortgage, including application fees and credit check fees. Make sure you understand these costs before applying. And your monthly payment includes a lot of fun things too… Principle, Interest, Taxes & Insurance on top of your payment for the mortgage itself. Don’t forget to account for things like an Appraisal, and Inspection or other tests if it’s an older home, these are out of pocket expenses for you. But I’ll tell you first hand, your peace of mind is absolutely worth it.

9. Don’t get discouraged: The pre-approval process can be challenging, and sometimes annoying, but I promise it’s such a relief when you finally get those keys. I’m here to guide you through all the ups and downs, and straight out of left field sh*t that can come up when buying your first home.

By following these tips and working with a reputable mortgage lender, you can make the pre-approval a little less scary. Buying a home is one of the biggest milestones in a person’s life, but it doesn’t have to be overwhelming. Remember to shop around, provide accurate information, and consider using a local lender for the best results. Oh, and Me as your realtor:)