Austin TX Real Estate - Hill Country Austin Lakeway Homes for Sale: Getting Pre-APPROVED and not just Pre-Qualified

Getting Pre-APPROVED and not just Pre-Qualified

When buying a house in Austin TX, you need to be Pre-Approved for a Mortgage before looking at properties in person.  This is the first step whether you're a first time home buyer or buying your fifth house. Notice that I used the term Pre-APPROVED and not 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.  Instead of the form saying "Good Faith Estimate," it now says something like "Initial Fees Worksheet" but it's basically the same thing; it's a breakdown of the numbers.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.

If you're looking to buy a house in the Austin TX area, contact me today and we'll review your goals together. The buying proceess is not months and months long and it doesn't have to be painful if you work with the right professional.

**Are You Packed Yet?**

donna harris Realtor Austin TX blog

Donna Harris, REALTOR®
RE/MAX Austin Skyline
www.DonnaHomes.coma
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© 2011 By Donna Harris, All Rights Reserved. You may re-blog with links back to this post.
* Getting Pre-APPROVED and not just Pre-Qualified * was first published on donnahomesblog.com.

Comment balloon 7 commentsDonna Harris • February 09 2011 10:05AM

Comments

Hi Donna,  Great Post.  I had a deal 2 months ago where I had the sellers.  The buyers were pre-approve, but the mortgage company drag the deal out from closing Nov 30 to closing Dec 28.  Wish the mortgages company did a better  job, my sellers were stressing out.

Posted by Will Hamm, "Where There's a Will, There's a Way!" (Hamm Homes) over 7 years ago

Well stated Donna...I still get faxed copy's that say pre-approval in the letter and the buyer has done nothing but prequal over the phone....I then recommend them to someone I know who will do the right thing...

Posted by Dennis Duvernay Broker/Owner (Hillview Realty) over 7 years ago

Great information. Most listing agents in my market scoff at a pre-qual letter.

Posted by Doug Rogers, Your Alexandria Louisiana Agent (Bayou Properties) over 7 years ago

Great post Donna.  Big difference in a pre-approval and a pre-qualification these days.  Much more leverage for those that understand.

Posted by Gabe Sanders, Stuart Florida Real Estate (Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales) over 7 years ago

Good information Donna. Its certainly worth the time for a buyer to provide the information for a pre-approval rather than a pre-qual. Quick note on the form, the GFE is now a 3 page document. Lender do not provide those until after a property has been identified. You'll end up with the Initial Fees Worksheet (as you mentioned) or what I have seen are some lenders providing a standard Excel Spreadsheet. To me, that would not be acceptable, but I've seen them when asked to compares rates/fees to others.

You have the right idea by educating your buyers so that they understand the program they are agreeing to.

Posted by John Cannata, Texas Home Mortgage - Purchase or Refinance (214-728-0449 http://TexasLoanGuy.com) over 7 years ago

Will, I bet the buyers were stressing too, not being in their home for the holidays.

Dennis, I love how mortgage people don't even know the difference. When I have the seller, I always call from the buyer's letter to check.

Doug, They should!

Gabe, Exactly!

John, GFE is now three pages and our standard contracts are now 9 freakin' pages!! Just killing more trees...

Posted by Donna Harris, Realtor,Mediator,Ombudsman,Property Tax Arbitrator (Donna Homes, powered by JPAR - TexasRealEstateMediationServices.com) over 7 years ago

 

Donna...Great post....There sure is a big difference in   Pre-approved vs  Pre-qualified  

 A Huge difference

 

Educating a buyer starts at this point ......Thanks

Posted by San Antonio Texas New Homes for Sale (www.sanantoniotexasnewhomesforsale.com) over 7 years ago

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