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      For Your Life May 20, 2026

      What Most Homebuyers Don’t Know About Starting the Mortgage Process

      Key Takeaways:

      • Being financially prepared ahead of time can help you set a firm budget and capitalize on opportunities early.
      • Prequalification is a quick, informal step that gives you an estimate of what you may be able to borrow, helping you explore your options early in the homebuying process.
      • Only 34% of prospective home buyers planning to use a mortgage were prequalified in 2025, meaning buyers who start the process early may have an advantage in a competitive market.

      House hunting is exciting. It’s easy to get caught up scrolling listings and touring open houses, imagining your life in a new space. But many buyers skip a critical first step: understanding their finances before they start searching. That early clarity can make the homebuying process smoother and put you in a much stronger position when you’re ready to start making offers. 

      In today’s market, that preparation matters more than ever. First-time buyers now make up just 21% of home purchases. That’s the lowest share since the National Association of Realtors began tracking in 1981, down from roughly 40% before 2008. At the same time, the home search itself is stretching longer, with nearly 60% of prospective buyers spending six months or more looking for a home in recent years.

      Part of the challenge is knowing where to start. According to the 2025 Zillow Housing Trends Report, only 34% of prospective buyers who intend to finance with a mortgage reported that they had gotten prequalified. Without a prequalification, it’s easy to delay getting financially prepared, which can lead you to overestimate what you can afford or miss out on the right home because you’re not ready to act quickly. 

      Starting early with a prequalification can bridge the gap between being a prospective buyer and becoming a homeowner. With the right information, you can stand out in a competitive market and navigate the homebuying process with confidence. 

      What Does Prequalification Mean?

      Prequalification is often the first step in the mortgage process. It’s a quick, informal way to get an estimate of how much you may be able to borrow based on the financial information you provide. 

      Typically, a lender will ask for an overview of your income, debts, assets, and credit profile. In most cases, this information is self-reported and typically doesn’t require documentation upfront. Based on this information, the lender can provide a rough borrowing range and help you understand what your monthly payment might look like. The process can be done within minutes.

      Prequalification isn’t a guarantee of a loan, but it can be a helpful starting point, especially if you’re early in your home search or still shaping your budget. It gives you a general sense of what price range to focus on and can highlight areas you may want to improve, such as reducing debt or building savings for a down payment.

      Rather than guessing what may or may not fit your budget, you can begin your home search with a clearer understanding of what's financially realistic. Because it's typically fast and low-commitment, prequalification can also be a useful way to start conversations with a lender, ask questions, and get more comfortable with how the mortgage process works before taking the next step.

      What’s the Difference Between Preapproval and Prequalification? 

      While prequalification and preapproval are often mentioned together, they serve different purposes in the homebuying process. Prequalification is a more informal first step that helps you explore your options based on self-reported information. The goal is to give you a quick, clear picture of what you can afford to help you begin your home search.

      Preapproval is a more detailed review of your finances that typically comes later in the homebuying process. During a preapproval, a lender conducts a full review of your financial documents, including pay stubs, tax returns, bank statements, and your credit history. The process usually takes between 1 and 3 business days.

      Neither represents a final loan commitment, but prequalification is usually the starting point in the homebuying process.

      Why Starting Early Matters in Today’s Housing Market

      In today’s market, preparation can make a meaningful difference. With affordability tight and desirable homes often moving quickly, buyers who understand their finances early are better positioned to act when the right opportunity appears.

      That preparation is especially important given the growing gap between intention and reality in real estate. About 20% of U.S. adults say they plan to buy a home within the next year, yet in recent years, only around 3–5% have successfully done so, according to Zillow. This disconnect highlights just how competitive and challenging the path to homeownership can be.

      By understanding your budget upfront through prequalification, you can focus your search on homes that fit your financial reality instead of adjusting expectations on the fly. It also gives you time to identify and address potential issues, whether that’s improving your credit, reducing debt or building additional savings.

      There’s also a practical advantage in terms of timing. In a faster-moving market, delays can mean missing out. Having a prequalification in place allows you to move quickly when you find a home you want, rather than scrambling to gather documents or waiting for lender review while other buyers are ready to act.

      Taking the First Step Toward Homeownership

      Even if you’re still in the early stages of thinking about buying, having a conversation with a lender can be a helpful first move. It’s an opportunity to ask questions and gain a better understanding of what to expect, all without committing to a specific timeline.

      If you’re ready to take that first step, you can contact a lender to get started with prequalification and move forward with greater clarity and confidence.

      All loans are subject to credit review and approval. Property insurance required for all loans secured by real estate. Rates are subject to change daily. Contact your Old National Banker or Residential Lender for current loan rates. NMLS #459308.

       

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