What is usually the first step in the home-buying process?

The first step in the home-buying process is typically getting pre-approved for a mortgage. This initial step is crucial because it establishes the buyer's budget and financial readiness to purchase a home. Pre-approval means that a lender has evaluated the borrower’s financial situation, creditworthiness, and ability to repay the loan and has provided a document stating the maximum amount the buyer can borrow.

This information is vital for several reasons: It helps buyers narrow down their home search to properties within their price range, ensuring they don't waste time looking at homes they can't afford. Additionally, having a pre-approval letter can strengthen a buyer's position when making an offer, as sellers often view pre-approved buyers as more serious and committed, minimizing the risk of financing issues later in the transaction.

Before looking for homes or engaging with real estate agents, it is essential for buyers to understand their financial capabilities. This foundational step sets the tone for a more organized and successful home-buying process.