So you’re ready to buy a house (or a condo, or a townhome, or a plot of land—we will get to all of that in a minute). First of all, congratulations! Buying real estate is one of the best ways to invest in your future, make money, and have total control over where you live. It’s a big opportunity to do something great.

However, unless you’re one of the lucky few who happens to be sitting on a large pile of money and is going to pay cash for a home, you’re likely going to need some help from a bank. Before you can tour homes, many real estate agents will require that you have a pre-approval letter first. Here’s why it’s important that you get that letter before you begin the hunt.

What is a Pre-Approval Letter

To put it simply, a pre-approval letter is a note from a lender that says how much money the bank is prepared to give you for a mortgage. It is not a guarantee of a loan, nor is it the same as taking a loan out. What is says to agents, and to people whose house you’re looking to purchase, is that a bank has done research on you (including credit checks, salary, and savings) and has found you to be a legitimate person that they are willing to lend money to.

It Lets You Know What You Can Afford

In a wonderful world, we could all afford that dream home on the beach, but the reality might be different. A pre-approval letter helps you set your budget and lets you know what you can afford. Before you spend hours of your life touring homes and researching with your agent, it’s best to know what you feel comfortable spending. The pre-approval letter will let you know what kind of property you can afford to, so if you have your heart set on a condo in the Loop, the letter will let you know your options.

It Helps Prove Legitimacy

It can take a lot of time to find a home, and agents working with clients want to know that at the end of all the house hunting, that their clients that they want to see get the home of their dreams, will be able to. To a potential homeowner, it also lets them know that among the stack of offer-letters that yours should be taken seriously.

Speeds up the Actual Mortgage Process

Once you’ve found your home that you want to invest your time in, the time between offer acceptance and closing can be very stressful for some. Having the pre-approval letter means that you’ve already done a lot of the leg work and ameliorates the process for getting your mortgage together.