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Spring is here, and so is the busiest season in real estate. More buyers are out looking for homes, which means more competition for you. If you want to put yourself in the best position to buy, there’s one step you can’t afford to skip, and that’s getting pre-approved for a mortgage.

Some buyers think they can wait until they’ve found a home they love before talking to a lender. But in a season where homes can sell fast, that’s a risky move. Getting pre-approved before you start your search is a much better bet.

Here’s what you need to know about this early step in the buying process.

What Is Pre-Approval?

Pre-approval gives you a sense of how much a lender is willing to let you borrow for your home loan. To determine that number, a lender starts by looking at your financial history. Here are some of the things that can have an impact, according to Yahoo Finance:

• Your debt-to-income (DTI) ratio: This is how much money you owe divided by how much money you make. Usually, you can borrow more if you have a lower DTI.
• Your income and employment status: They’re looking to verify you have a steady income coming in – that way they feel confident in your ability to repay the loan.
• Your credit score: If your score is higher, you may qualify to borrow more.
• Your payment history: Do you consistently pay your bills on time? Lenders want to know you’re not a risky borrower.

After their review, you’ll get a pre-approval letter showing what you can borrow. Having this peace of mind is a big deal – it helps you feel a lot more confident in your ability to get a home loan. And the fringe benefit is it can also speed up the road to closing day because the lender will already have a lot of your information.

It Helps You Figure Out Your Budget

Spring is a competitive season, and emotions can run high if you find yourself up against other buyers. Having a firm budget in mind is so important. You don’t want to get too attached and end up maxing out what you can borrow. As Freddie Mac explains:

“​Keep in mind that the loan amount in the pre-approval letter is the lender’s maximum offer. Ultimately, you should only borrow an amount you are comfortable repaying.”

So, use this time to really buckle down on your numbers. And be sure to factor in other homeownership costs – like property taxes, insurance, and maybe even homeowner’s association fees – so you know what you can comfortably afford.

Then, partner with your agent to tailor your search to homes that match your budget. That way, you don’t fall in love with a house that’s out of your financial comfort zone.

It Helps Your Offer Stand Out During the Busy Season

Spring buyers aren’t just competing for homes. They’re competing for the seller’s attention, too. And a pre-approval letter can help you stand out by showing sellers you’ve already gone through a financial check. Zillow explains it like this:

“Having a pre-approval letter handy while you’re shopping for a home can also help you act quickly once you’ve found a home you love. The letter shows potential sellers that you’re a serious buyer who has the financial means to close on the home. In a competitive market, an offer with a pre-approval letter attached will stand out among other offers that don’t include one — increasing the chances of your offer being accepted.”

That means when sellers are choosing among multiple offers, yours could rise to the top simply because you’ve already taken this step.

And here’s one final tip for you. After you receive your letter, avoid switching jobs, applying for new credit cards or other loans, co-signing for loans, or moving money in or out of your savings. That’s because any changes to your finances can affect your pre-approval status. 

Bottom Line

If you’re thinking about buying a home this spring, getting pre-approved should be your first move. It’ll help you understand your budget, show sellers you’re serious, and keep you from falling in love with a house that’s out of reach. Talk to a lender to get started.

What’s your plan to stand out in this competitive market? Connect with an agent to make sure you’re fully ready to buy.

Homeowner’s insurance is a must-have to protect what’s probably your biggest investment – your home. And while you never want to think about worst-case scenarios, the right coverage is basically your safety net if something goes wrong. Here’s how it helps you.

• Covers Repairs and Rebuilding Costs: If your home is damaged by fire, storms, or other covered events, your policy helps pay for repairs or even a full rebuild.
• Protects Your Belongings: Many policies can also cover personal items like furniture, electronics, and clothing if they’re stolen or damaged.
• Provides Liability Coverage: If someone gets injured on your property, homeowner’s insurance can help cover medical bills or legal expenses.

In the simplest sense, it gives you peace of mind. Knowing you have protection against unexpected events helps you worry less. And with such a big purchase, having that reassurance is a big deal.

And while your first insurance payment will be wrapped into your closing costs, you’ll want this to be a part of your budget beyond closing day too. That’s because it’s a recurring expense you’ll have once you get the keys to your home.

Here’s what you need to know to help you budget for this important part of homeownership today.

Costs and Claims Are Rising

In recent years, insurance costs have been climbing. According to Insurance.com, there are four big reasons behind the jump in premiums:

• More severe weather events and wildfires are leading to higher claims.
• Insurance companies are pulling out of high-risk areas, reducing options for homeowners in some states.
• Past rate increases haven’t kept up with the rise in claims.
• The cost to rebuild or repair homes has gone up due to higher material and labor costs.

Basically, disasters are happening more often, repairs cost more, and insurers have to adjust their rates to keep up. Data from ICE Mortgage Technology helps paint the picture of how the average yearly premium has climbed over the last decade (see graph below):

What You Can Do About It

Homeowner’s insurance is a must to protect your home and your investment. But with costs rising, you’ll want to do your homework to balance the best coverage you can get at the best price possible.

Homeowner’s insurance rates vary widely based on location, provider, and coverage. Shop around and compare quotes before settling on a policy. And don’t forget to ask about discounts. Things like security systems or bundling with auto insurance could help lower your insurance costs.

Bottom Line

When you’re planning to buy a home, it’s important to look beyond just your mortgage payment. You’ll also want to budget for your homeowner’s insurance policy. It gives you a lot of protection against the unexpected. And while it’s true those costs are rising, there are things you can do to try to get the best price possible.

What’s your biggest concern when it comes to budgeting for homeownership? Talk to an agent to make sure you’re set up for success.

It’s no secret that remote work has surged over the last few years. And that flexibility gave a lot of people the freedom to move — and work — from wherever they wanted.

But now, a growing number of companies are requiring employees to return to the office. And that’s leading some people to make decisions about where they live and if they need to move.

How Return-to-Work Policies Are Impacting Housing

During the rise of remote work, a lot of employees took the opportunity to move away from expensive or crowded city centers. Some opted for suburban neighborhoods and larger homes with yards, while others relocated to more rural areas. But lately, more people are returning to the city.

And according to data from Bright MLS, more than half of workers surveyed would have to rethink where they live or deal with long drive times if their job enforced a return-to-office policy (see chart below):

And maybe you’re one of them. If you moved farther out of the city during the work-from-home era, you may be facing a longer commute that you never expected to make daily. Once you’ve done it a few times, you might find it’s something you can get used to and isn’t as bad as you may have thought.

But sometimes, it’s just too hard to make it work — no matter how much you try. A drive or train ride that seemed fine once or twice a week can feel like too much of a grind five days in a row. It may also cost too much to commute so often, take too long, or cut too far into your free time. As Lisa Sturtevant, Chief Economist at Bright MLS, notes:

“During the pandemic, when remote work became the norm, homebuyers were able to move farther out . . . But workers do not have the same flexibility that they used to, and some are going to have to make a tough choice if and when their employer calls them back into the office full-time.”

If you’re thinking you may want to move, don’t stress. Talking to an agent can help you weigh your options. Whether it’s finding a home closer to work, balancing commute time with affordability, or even selling a home in one area to buy in another, having a pro on your side makes the process easier.

Bottom Line

If having to be back in-office has you considering a move, an agent can help you figure out what’s possible and what makes sense for you.

Where do you see yourself living if your commute or work routine needs to change?

Are you having a hard time finding the right home in your budget? Or maybe you already own a home but could use some extra income or a designated space for aging loved ones. Either way, accessory dwelling units (ADUs) could be the smart solution you’ve been looking for in today’s market.

What Is an ADU?

According to Fannie Mae, an ADU is a small, separate living space that’s on the same lot as a single-family home. It must include its own areas for living, sleeping, cooking, and bathrooms independent of the main house. And they can take shape in a few different ways. Fannie Mae adds, an ADU can be:

• Within a main home, such as a basement apartment
• Attached to a main home, such as a living area over a garage
• Detached from the home entirely; it could even be a manufactured home

The Benefits of ADUs

ADUs are growing in popularity as more people discover why they’re so practical. In fact, a recent survey shows that 24% of agents say an ADU, such as a mother-in-law house, is one of the most desired features buyers are looking for right now.

The growing appeal makes sense. With rising costs all around you, an ADU can help supplement your income and ease some of the strain on your wallet. Whether you buy a home that has one already or you add one on, it gives you the option to rent out that portion of your home to help pay your mortgage.

Here are some of the other top benefits of ADUs, according to Freddie Mac and the AARP:

• Living Close, But Still Separate: You get the best of both worlds — more quality time together, plus privacy when you want it. If that sounds like a win, it might be worth looking for a home with an ADU or adding one to your home.
• Aging in Place: Similarly, ADUs allow older people to be close to loved ones who can help them if they need it as they age. It’s a sweet spot that offers independence and support from loved ones. For example, if your parents are getting older and you want them nearby, this could be a great option for you.
• Built-In Childcare: If your family’s living in the ADU, you may be able to use them for childcare, which can also be a big cost savings. Plus, it gives your kids more time with their grandparents.

It’s worth noting that since an ADU exists on a single-family lot as a secondary dwelling, it typically can’t be sold separately from the primary residence. And while that’s changing in some states, regulations vary by location. So, connect with a local real estate expert for the most up-to-date guidance.

Bottom Line

In today’s market, buying a home with an ADU or adding one to your current house could be worth considering. Just be sure to talk with a real estate agent who can explain local codes and regulations for this type of housing and what’s available in your area.

What’s your motivation for exploring ADUs?