9 Steps to Get Pre-Approved and Ready to Purchase in 2025

If buying a home is on your 2025 to-do list, starting with a solid financial foundation is vital. One of the most important steps is getting pre-approved for a mortgage, but there are a few steps you should take to better prepare for a meeting with a lender. Here’s how you can position yourself to move quickly and confidently in the 2025 Houston housing market.

1. Check Your Credit Score

As with most things in our modern day, your credit score is very important and significantly impacts your mortgage eligibility and interest rate. The higher your score, the better your rate. If you’re unsure of your score, get a free report from annualcreditreport.com and check for errors. Regularly reviewing your credit can also help you catch issues, such as forgotten debts, before they become a problem. Aim for a score of at least 620, though a score of 740+ often qualifies for the best rates. If you need to improve your score, focus on paying down debt and making on-time payments.

2. Set Your Budget

Determine how much home you can afford based on your income, savings, and monthly expenses. A general rule of thumb is to keep your housing expenses at or below 28% of your gross monthly income. Don’t forget to factor in property taxes, insurance, and potential homeowners’ association fees. And if you're totally lost, don't worry - this is something a lender or real estate agent can help you better understand!

3. Save for a Down Payment and Closing Costs

While many loan programs allow for lower down payments (as little as 3-5%), aiming for 20% can help you avoid private mortgage insurance (PMI). That being said, if you are not able to save 20% for a down payment, don't worry. You are not alone. I've found that 10% is becoming more and more common for buyers. Additionally, set aside funds for closing costs, which typically range from 2-5% of the home’s purchase price.

4. Gather Financial Documents

Lenders will request documentation to verify your income, assets, and debts. Now it a good time to start organizing these documents:

• Recent pay stubs

• Tax returns and W-2s/1099s from the past two years

• Bank and investment account statements

• Records of any outstanding loans or credit card balances

5. Shop Around for Lenders

Research lenders to find the best rates and terms. Compare options from banks, credit unions, and mortgage brokers. Ask about loan programs, interest rates, and estimated closing costs. If you're not sure where to start, your Lemon Grove agent would be happy to refer you to our trusted lenders. 

6. Get Pre-Approved

Once you’ve selected a lender, complete the pre-approval process. This involves:

• Submitting your financial documents

• Allowing a credit check

• Discussing your budget and loan options with a lender

A pre-approval letter shows sellers you’re a serious buyer and provides a clear idea of your borrowing capacity. Keep in mind that pre-approvals are typically valid for 60-90 days. We recommend getting pre-approved as soon as you're wanting to purchase. This will help you determine if there is anything you need to work on before taking the official step towards homeownership. 

7. Avoid Major Financial Changes

Once pre-approved and especially once under contract, avoid making any large purchases, opening new credit accounts, or changing jobs. All of these changes can affect your credit score or debt-to-income ratio, potentially jeopardizing your approval.

8. Connect with a Real Estate Agent

Even though this is step #8, you can honestly reach out to a real estate agent from the very beginning. Your Realtor should be able to help you get started on the process and refer you to qualified lenders. No only does an experienced agent guide you through the home-buying process, they can also help you identify the right property, prepare an strong offer and negotiate on your behalf. Be sure to share your pre-approval letter with them, so they can tailor recommendations to your budget and preferences.

9. Stay Updated

Market conditions can shift quickly, so stay in regular contact with your lender and Realtor. They can help you navigate rate changes, competitive offers, market adjustments, etc.

Ready to find your dream home in 2025? Let’s get started and make it happen!