For Austin home buyers there has not been a better time to go real estate shopping in the past several years. Falling home values, an increase of homes available on the market and record-low mortgage rates have made it a buyer’s market when it comes to Austin real estate. But whether you’re a first time home buyer, you’re looking to upgrade to a larger house for your family or you’re looking to downsize for retirement, there are a few things you need to do first.
Before you contact Forte Properties, search for Austin homes or even try to figure out your budget for a new house you’re going to want to get a pre-approved loan letter from a bank or lending institution and to do that you have to do some work.
When you first begin investigating how to buy an Austin area home you’ll quickly learn that home sellers and Realtors® strongly advise you to get a letter of pre-approval or pre-qualification from a bank or lender. Some organization use the two terms interchangeably, but most financial institutions clearly recognize a pre-approved home loan vs. a pre-qualified home loan.
Pre-Qualified Mortgage Loan
Getting pre-qualified for a mortgage is relatively simple. Fill out the home loan prequalification form right here on GreaterAustinHomes.com! You can also call the mortgage department of your bank or lender and explain that you would like to get pre-qualified to borrow money to buy a house. They will ask you some basic questions, they may require a few minor pieces of paperwork such as a copy of a paycheck or other general proof of income. They will ask you a little bit about your current debts, obligations and living situation. It is a relatively short process. Once your are done the bank or lender will give you an estimate amount of money they would be willing to loan to you based on the conversation and information you provided. The amount will usually be sent to you in a pre-qualification letter and the qualification is usually only good for 60 or 90 days from the date of being issued. To get pre-qualified for a home loan usually doesn’t cost anything but it also doesn’t prove very much. There is no commitment on the part of the bank to loan you the money.
Pre-Approved Mortgage Loan
Getting pre-approved for a loan is much more difficult, but it puts you in a much better bargaining position if you find a house you want to buy. The mortgage pre-approval process is much more stringent than the pre-qualification process and it will require you to provide lots of proof of income including multiple paycheck stubs, federal tax statements and they will most likely run a credit report. After all of that information has been gathered by the bank they will let you know how much they will be willing to give you.
With a pre-approved mortgage loan the bank is essentially committing to give you a loan for a specified amount, with the understanding that the borrower can afford the terms they list. This puts you and your Realtor® in a much better bargaining position if you find a home that you want to buy. If that same home is being bid on by three potential buyers and you have the only pre-approved mortgage loan letter then the sellers will most likely sell the house to you because they stand a much better chance of having the sale go through.
Remember that a pre-approved mortgage loan is a commitment, but not a 100% guarantee that a lender will loan you the money. The bank can still deny you the loan if they don’t feel that the house is valued correctly, there are irregularities in the title search or if additional financial checks turn up other issues.
When working for a bank to get a pre-approved mortgage loan you want to be upfront and honest because anything found at the last minute could cause the bank to drop all commitments to you and not be willing to work with you again. At that point you’re back to square one in the buying process and you probably wasted a lot of your time and energy as well as that of your real estate agent.