Getting pre-approved should always be your first step.

One way to show you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search.

In many markets across the country the number of buyers searching for their dream homes greatly outnumbers the number of homes for sale. This has led to a competitive marketplace where buyers often need to stand out.

Understanding your budget will give you the confidence of knowing if your dream home is within your reach.

Freddie Mac lays out the advantages of pre-approval in the ‘My Home’ section of their website:

“It’s highly recommended to work with a lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

Local real estate professionals have relationships with lenders who will be able to help you with this process. Select a lender.  Fill out their loan application. Provide them with important information regarding “your credit, debt, work history, down payment and residential history.”

Freddie Mac describes the ‘4 Cs’ that help determine the amount you will be qualified to borrow:

Capacity: Your current and future ability to make your payments.
Capital or cash reserves: The money, savings, and investments you have that can be sold quickly for cash.
Collateral: The home, or type of home, that you would like to purchase
Credit: Your history of paying bills and other debts on time.
Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.