Mortgage approval is a useful bargaining chip when you’re shopping for a new home. Sometimes, having a pre-approval letter in place can mean the difference between having your offer accepted or having the lender choose another buyer who does. It also helps you know what you can genuinely afford to buy. Before heading to the bank to apply for a pre-approval letter, consider these tips to help you succeed.

1. Improve Your Credit

Before applying for a mortgage, do what you can to increase your credit score. The higher your credit score, the better your chances of getting approved are.

While improving your credit, focus on reducing the debt-to-income ratio. Your lenders want to see that a low percent of your income each month is spent on your debts, and they will reward this by qualifying you for a more considerable mortgage amount.

2. Ask Questions

If you’re applying for your first mortgage, or if it’s been a while since you applied for a mortgage loan, you likely have some questions. Ask these questions before you start the mortgage process. Ensure you know precisely what you can expect from the process ahead, so you will not make mistakes.

3. Understand Your Limits

As part of the mortgage process, your lender will tell you the top amount they are willing to lend you based on your financial information. Do not fall into the trap of thinking this is how much you need to spend. Consider your overall budget, including the costs of property taxes, utilities, and other costs of homeownership. Just because the lender says you can borrow $200,000 doesn’t mean you need a $200,000 house. Shop within your means, and remember that a pre-approval is just one tool to help you understand what you can afford.

4. Adjust the Pre-Approval Letter

If you are buying a house that is less than your approved amount, ask your lender to adjust the letter to show only the amount you’re going to spend. If the seller sees that you’re approved for $30,000 more than they’re asking, they’ll be less willing to make concessions that you might want.

5. Time Your Pre-Approval Letter Carefully

Your mortgage pre-approval letter comes with a time limit. After it expires, you’ll have to request a new one. Most buyers should wait to apply for pre-approval letter until they’re ready to start actively looking for a house, not when they first start thinking about buying one.

A mortgage pre-approval letter is a great tool to help you negotiate your home purchase. Take the time to understand what pre-approval means, time your application carefully, and arm yourself with the right tool to move forward effectively with your home purchase.

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This is not a commitment to lend. Terms and conditions of programs, products and services are subject to change. All loans are subject to credit approval and property appraisal. Certain restrictions may apply on all programs. First Home Mortgage Corporation of America, First Home Mortgage Services, and First Home Mortgage Company of Maryland are d/b/a’s of First Home Mortgage Corporation. First Home Mortgage Corporation is licensed in Connecticut, Delaware, District of Columbia, Florida, Georgia Residential Mortgage Licensee (Lic. #23135), Indiana, Kentucky, Maine, Maryland, Massachusetts Mortgage Lender and Broker (Lic. #MC71603), Michigan, New Hampshire, Licensed by the New Jersey Department of Banking and Insurance, North Carolina, Pennsylvania, Rhode Island Licensed Lender and Broker, South Carolina, Tennessee, Vermont, Virginia, West Virginia. Equal Housing Lender. First Home Mortgage Corporation NMLS ID #71603 (www.nmlsconsumeraccess.org). Privacy Policy.