Investing in property is an exciting and daunting process.
Just like most things, one of the hardest parts can be just getting started. What every first-time homebuyer should know before getting pre-approved is that this first step lays the groundwork for everything that follows. At NewFed Mortgage, we work to help our clients get through challenges and into a home they can be proud of.
Let’s get you started on your path to homeownership by addressing the most important question first: where should you even start? The answer is with a pre-approval.
What Is a Pre-Approval?
Pre-approval is a lender’s written offer stating how much you may be able to borrow based on your credit, income, and assets. It’s not a guarantee, but it shows sellers you’re serious and ready to buy. This is not to be confused with a pre-qualification.
Pre-Approval vs Pre-Qualification: What’s the difference?
These two mortgage terms are often confused, but they serve very different purposes in the homebuying process—especially for first-time buyers.
Pre-Qualification | Pre-Approval |
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Why Pre-Approval Matters
One of the most important steps in the mortgage process is getting pre-approved.
This shows sellers that you are serious and gives you an idea of what you can afford, helping you build credibility, house hunt with confidence, and lay out the foundation for budgeting wisely.
Your NewFed Loan Officer will review your credit, income, debts, and assets to determine what loan options you qualify for. Understanding this process is key to what every first-time homebuyer should know before getting pre-approved.
Commons Mistakes First-Time Buyers Make
Even if you’re financially ready, it’s easy to make small mistakes that can delay—or derail—your mortgage pre-approval. Here’s what every first-time homebuyer should know before getting pre-approved when it comes to avoiding these pitfalls:
🚫 Changing Jobs or Income Sources
Lenders look for employment and income stability. A job change (even for more money) can raise red flags during underwriting.
🚫 Opening New Credit Accounts
Avoid applying for new credit cards, car loans, or financing plans while going through pre-approval. These can affect your credit score and debt-to-income ratio.
🚫 Making Large Unexplained Deposits or Withdrawals
Lenders need to trace the source of your funds. Sudden or undocumented transfers can complicate the process or cause delays.
🚫 Ignoring Credit Issues
Pre-approval includes a credit check. It’s best to address any disputes, late payments, or high balances beforehand to improve your options.
🚫 Assuming Pre-Approval Means Guaranteed Financing
Pre-approval is a strong step—but it’s not a final loan commitment. Avoid overextending your budget or skipping the next steps in the mortgage process.
What You’ll Need to Apply
Getting pre-approved usually takes between 3-5 days. Coming prepared can help speed things along. Save this section as a checklist! It’s one of the most practical pieces of what every first-time homebuyer should know before getting pre-approved.
Here is a brief breakdown of what documents you should have accessible when getting pre-approved:
- The two most recent years’ W2s
- Two most recent years’ tax returns (personal & business if applicable)
- The two most recent pay stubs
- The two most recent months’ bank statements
- The two most recent months’ 401K or retirement statement
- Copy of the front of a valid driver’s license
How To Decide If You’re Ready To Get Pre-Approved
To make this process smoother, there are a few things you should consider before contacting your loan officer.
First, are you ready to buy?
This may seem obvious, but there is more to consider than you might think. Consider if you are ready to commit to a home (you’ll be living here for quite some time), if you have the capital for a down payment, if your credit score could help or hinder your loan options, and if you qualify for any assistance (such as first-time homebuyer programs).
Second, are your finances sound, secure, and not subject to change?
Purchasing a new home can be expensive, and as we have discussed, it is necessary to have the funds for the initial down payment. Are you in a place where your finances are stable. Changing jobs, salary fluctuation, missing credit card or loan payments, or changing your financial situation in any way can create difficulty in the loan process.
Third, is your family unit changing?
This is an important thing to consider before settling down. If you are planning on getting married, divorced, having a child, or caring for a loved one, then you should consider what property you may want to purchase, and how your family unit may change your expenses.
Take The First Steps with Confidence
Not sure if you are ready?
That’s okay! If you aren’t quite ready to commit, you can still chat with one of our Loan Officers to discuss your plans.
For more information on what loan options are available to you, and how your financial situation may affect your choices, reach out to our team today!
