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.
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.
** #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.