One Homebuying Step You Don’t Want To Skip: Pre-Approval in Massachusetts

One Homebuying Step You Don’t Want To Skip: Pre-Approval in Massachusetts

If you’re planning to buy a home in Massachusetts, one critical step you shouldn’t overlook is getting pre-approved for a mortgage. Here’s why pre-approval is especially important in today’s market.

What Is Pre-Approval?

Pre-approval is like getting a green light from a lender. It tells you how much they’re willing to let you borrow for a home based on your financial history. According to Realtor.com, these are some of the documents a lender may ask you for during this process:

• W-2s from the last two years

• Tax returns from the last two years

• Pay stubs from the last 30 days

• Bank statements from the last 60 days

• Investment account statements (if applicable)

• Two years of history of where you’ve lived

The result? A pre-approval letter showing how much you can borrow. Keep in mind, changes in your finances—like switching jobs, applying for new credit cards, or taking out large sums of money—can impact your pre-approval status.

How It Helps You Determine Your Borrowing Power

Home prices in Massachusetts can vary significantly, whether you’re looking in Boston, Worcester, or Cape Cod. With prices expected to rise in many areas and mortgage rates showing some volatility, pre-approval helps you understand your borrowing power.

During this process, you can discuss loan options with a lender and understand how today’s changing rates impact your monthly payment. Pre-approval sets the maximum amount you can borrow and helps you establish a budget. This ensures your home search focuses on properties within your financial comfort zone and avoids disappointment from falling for a house outside your budget.

How It Helps You Stand Out in Massachusetts

Massachusetts is a competitive real estate market, particularly in sought-after areas like Cambridge and Newton. Once you’ve found a home you love, pre-approval has another advantage: it strengthens your offer. Sellers will see you as a serious buyer who has already undergone a credit and financial review.

As Greg McBride, Chief Financial Analyst at Bankrate, explains:

“Preapproval carries more weight because it means lenders have actually done more than a cursory review of your credit and your finances, but have instead reviewed your pay stubs, tax returns and bank statements. A preapproval means you’ve cleared the hurdles necessary to be approved for a mortgage up to a certain dollar amount.”

In a competitive market, this can make all the difference in securing the home you want.

Bottom Line

If you’re planning to buy a home in Massachusetts, getting pre-approved for a mortgage should be one of your first steps. It helps you understand your borrowing power and positions you to make a strong offer when you find the right home. Connect with a trusted local lender today to get started.