How Getting Pre-Approved Could Save You Thousands

A lot of homebuyers think the best thing they can do before buying a home is pay off all their debt. It sounds like the responsible thing to do, and in many cases, paying down debt can help. But before making a big financial move, it is always better to first go through a pre-approval consultation so you know exactly where your money will help you the most.

I recently spoke with a client who was preparing to buy a home and planned on paying off all their credit cards before starting the process. Their idea was simple: “If I pay off my debt, I’ll be in a better position to buy.” So we reviewed their income, credit, debts, and available funds together before they moved any money around.

After going through the numbers, we found out they did not need to pay off those credit cards to qualify for the home they wanted. Paying them off would have helped them qualify for a higher purchase price, but they already qualified for the price range they were comfortable with. They did not want a larger payment or a more expensive home.

So instead of using thousands of dollars to pay off debt they did not need to pay off right away, they were able to keep that money available for the home purchase. That money could now be used for closing costs, down payment, reserves, moving expenses, or even buying down the interest rate.

This is why getting pre-approved early is so important. A strong pre-approval is not just about finding out how much you qualify for. It is about creating the right plan before you make big financial decisions.

Every buyer’s situation is different. Sometimes paying off debt is the right move. Sometimes keeping the cash available is the better strategy. Sometimes paying down one specific account helps more than paying off several smaller ones. The only way to know is to review the full picture first.

Before you make any major financial moves, speak with a loan officer and get pre-approved as early as possible. The right plan could save you thousands and help you prepare correctly for your home purchase.