To secure financing before purchasing a second-hand home, first obtain a mortgage pre-approval from a lender to understand your budget and strengthen your offer. Next, review and improve your credit score, as higher scores typically qualify for lower interest rates. Save for a down payment of at least 20% to avoid private mortgage insurance (PMI) and access better loan terms. Compare mortgage options, including fixed-rate versus adjustable-rate mortgages, and shop around for competitive rates. Finally, document your financial stability, such as steady income and savings, to demonstrate credibility to lenders.

Securing financing requires strategic preparation to ensure financial readiness and favorable terms. A mortgage pre-approval is critical because it provides a clear budget, making offers more attractive to sellers. Data from the National Association of Realtors (NAR) shows that 75% of offers from pre-approved buyers are accepted, compared to 52% from unapproved buyers. Additionally, a credit score above 620 (Fannie Mae’s minimum) is necessary for conforming loans, with scores above 740 qualifying for the lowest rates. The Federal Reserve reports that a 20% down payment reduces loan costs by up to 1.5% annually, as it eliminates PMI and lowers the principal. For example, a $300,000 home with a 20% down payment saves $4,500 annually compared to a 10% down payment. Lenders also favor stable income; the NAR notes that buyers with consistent employment for 24+ months secure loans 30% faster. Pre-approval and credit optimization not only streamline the process but also secure better rates, as the average 30-year fixed rate in 2023 was 7.25%, according to Freddie Mac. By addressing these factors, buyers minimize delays and maximize purchasing power in competitive markets.