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Pre-approval lets you know how much you can afford before you start shopping for a home.

Why get your hopes up looking at $500,000 homes, when you can really only afford a $300,000 home? Before you start house hunting, narrow down your price range by getting pre-approved. Shop for a lender or mortgage broker you can trust. The mortgage pro will review your credit, income, assets and debts, and recommend a mortgage with monthly payments that fit your budget. The result is a good faith estimate, a document that spells out the likely terms of your loan, including the interest rate and closing costs. Not only does this let you know how much house you can afford, it also lets sellers know that you're serious about buying.

• Understand the difference between pre-qualification and pre-approval

• Find out more about the pre-approval process

• Get tips for buying your first home in FrontDoor's First-Time Buyer's Guide

• Learn what moves to make and what mistakes to avoid when buying a home

NEXT: #9: Thinking short-term >>