When buying a house in Austin TX, there are several steps to follow, but if broken down, it's much less intimidating. What else helps? Doing the steps in a particular order.
For example, the first, and more important step to buying a home, whether you're a first time home buyer, or buying your fifth house, is getting Pre-APPROVED for a mortgage. I used the term pre-approved because I don't want to see the term pre-qualified.
What's the difference?
A pre-qualified buyer is someone who made a phone call to a mortgage professional, gave that person a few pieces of verbal information, and the mortgage person said you're pre-qualified.
A pre-APPROVAL means the mortgage person ran your credit, collected bank statements, W2's, and paycheck stubs, and ran numbers based on true debt to income ratios, and by gathering all this information, pre-approves you for a mortgage. Many lenders are actually putting a buyer through underwriting before writing an offer to get a full approval, but as long as basic information is captured up front, that should be a good start.
When getting approved, ask the mortgage person for a Good Faith Estimate (GFE). You'll get one from each mortgage person you speak to, as this is the only way to actually compare apples to apples. When collecting them, make sure you get one from each lender on the SAME day.
Why is this important? Because rates change daily. You might be quoted a 5% one day, and the next lender quotes 5.25%, and then you decide to use the first lender only to find out their rate is also 5.25% because rates changed.
Rates are not the only thing to compare. You need to look at the Lender fees. Do NOT look at the other fees on the GFE because those are not Lender controlled costs. Those are only estimates from third parties and some mortgage people estimate low to look better, while some estimate high for the just in case situation.
If one lender quotes 5.25% but has fairly low fees, how does he compare to the lender charging only 5% but has high lender fees? Look at all the numbers, not just the rate!
Once you have a pre-approval letter in hand, you can then start looking for houses because you now know the exact price range you need to stick within and you won't be shocked with the payments by looking at houses you can't afford.
Also, having the pre-approval letter in hand to submit to sellers when submitting an offer makes you look much more serious than a buyer submitting a pre-qual letter with their offer.
Step 2 is how to go about looking for the right house, so stop back by!
**Are You Packed Yet?**
Donna Harris, REALTOR®
RE/MAX Austin Skyline
www.DonnaHomes.com
Donna@DonnaHomes.com
Austin TX Real Estate and the surrounding areas of Lakeway, Bee Cave, West Lake Hills, Cedar Park, Round Rock, Spicewood, Circle-C, Steiner Ranch, and everywhere in between... Hill Country Austin TX Real Estate and beyond. Whether you're buying or selling an Austin home, I'll be with you every step of the way.
For real time Austin TX listings, click here.
** #1 Agent in my Office for all of 2008 **
Copyright© 2009 By Donna Harris, All Rights Reserved. You may re-blog with links back to this post.
* Real Estate - Buying a House - Austin TX- The Simple Steps to Follow- Part 1 * was first published on donnahomesblog.com
Donna Excellent post - we are both working on the same thing, but with a slightly different approach Karen
Donna, I so enjoy learning from the best in the business. I look forward to Part 2...
Many people still want to look at homes before knowing if they can get a loan. Your loan will be a great resource for folks.
Karen, I'll have to read yours when I get a few minutes this weekend.
Paul, Thanks! *blush*
Joetta, I know, and people don't get in my car until I get an approval letter!
Donna here is the link to the blog on the Recall for the Wii: Wii(tm) Battery Recharge Stations Recalled by Griffin International Due to Burn and Fire Hazards it will give you all the information you will need to check models for (chargers). I don't know much about them but grandkids have a Wii so Ceil sent it to the daughter-in-laws.
Hi Donna
Very informative post, thanks for taking the time to share the information.
Good luck and success.
Lou Ludwig
Donna - Excellent advice. Getting a GFE is a critical step. I'd say 60% of pre-qualified/approved buyers who call me, never recevied one.
Donna,
Great post. I am looking forward to Part 2. It is so important that buyers get with a good loan officer.
i'd say you did well explaining this. it's worth mentioning that taxes and insurance are often misquoted. When lenders do this, the payment and down payment can appear unreasonably low. the worst part is that those fees aren't included in the APR and are thus not governed under the new rules. something to be on guard for...