This is the first post in a series designed to get you prepared for what to expect when you are considering buying a home in the Austin area. I intend to link to the other parts as soon as they have been written.
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When you are ready to begin shopping for a home to buy, it is best to start by determining how much you can afford, so that you don't waste time with properties that are out of your price range. I realize that this is not the glamorous or exciting part to buying a home in Austin, but it is a necessity and not as painful as you may think.
But how do you begin?
Our team works with a trusted network of mortgage professionals who can assist you in getting pre-approved for a loan so that you can comfortably begin looking at homes with the assurance that you can obtain the proper financing. Give us a call anytime and we can provide some names to get you started.
Pre-Approval vs. Pre-Qualification
Generally, our mortgage contacts can help you with a pre-qualification by getting some basic information (address, social security numbers, etc.) over the phone or internet. This only takes a few minutes, including pulling your credit report.
In order to get fully pre-approved, you will be required to provide all of the normal documentation required, which would include:
- Full loan application
- 2 years of tax returns, W-2 forms
- Year-to-date pay stubs
- A couple of months' worth of bank statements
- List of monthly debt, account numbers, minimum payments, and balance
- Address of mortgage company or landlord for past 2 years
- Driver's license
- If VA financing is wanted, you will need your VA Certificate of Eligibility (DD214)
In Austin, most lenders will require you to pay for your credit report and property appraisal upfront. This would run $400 or thereabouts. The appraisal is a third-party assessment of the value of the home you choose.
Comparing Lenders
If you choose to purchase a new home, many builders have mortgage companies that will offer large incentives to use them. Sometimes, the offer is too good to pass up. We can help you to compare "apples to apples" by looking at the estimates provided by lenders that you speak with. A GFE (good faith estimate) is the only way to easily compare quotes. Sometimes, you might get a lower interest rate from one place, but they charge exorbitant fees. We can help you to avoid potential pitfalls.
I always require that my clients begin the loan process before we begin looking actively at homes together, in order to best spend my time and yours. Believe me, it is much more productive this way. As I have said many times to potential buyers, you would hate to find "the perfect home", only to later realize that you won't be able to get a mortgage for it.
If you have any questions at all, please feel free to call me anytime at 512-796-7653 (cell) or email jason@austintexashomes.com.
Next step - Buying a Home in Austin, Texas - Step Two: Selecting an Area of Town
Photo above courtesy of Rev Dan Catt via Flickr.com.
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If you're looking for a home in the Austin area, you can also visit my primary Austin real estate website at www.austintexashomes.com. If you're interested in social media training, visit 210 Consulting. Thanks!
Good advice J....this process is so important for every byer. Working with a good lender and realtor makes all the difference in the world.
Excellent - I think I am going to like these series posts a lot :) ~Rita
Ahh the first entry I've seen for Bob's contest - I guess I need to get rolling or I'll miss this one too :-)
Great, I am looking forward to reading this series.
Good advice Jason. Asking a buyer is they have been pre-approved is always one of the 1st questions I ask. You know besides the price it will be one of the sellers major concerns and rightfully so.
Great article -- I'm always amazed about how many buyers don't understand how important it is to get pre-approved.pi
Hey Jason, I always get a buyer at least pre-qualified, if not pre-approved, before we even venture out looking for a home. It saves a lot of time and potential disappointment. Great article!
Have a wonderful weekend,
Anne Rains
Jason - with more first time home buyers out there shopping to take advantage of the tax credit, this is the kind of thing that they will be searching for. I like this series!
This assumes that the buyer needs financing, which is true probably 80-90% of the time. What is your process if they say they are paying cash?
John - Basically, we just require verification of funds from a legitimate source. I don't need bank statements per se, but we do need to speak with someone who can verify that the buyer has enough liquid funds to fund the transaction.
Jason - Do lenders even do pre-qualification anymore? I thought that went the way of the dinosaur. (I think I used that same image in my Pre-approval post on my main site - you have good taste my friend).
Jason - this is a good idea for a series to write about. Certainly people have many questions about where to begin.
Matt - I have found that most "pre-approval" letters that I get on my listings are nothing more than a simple pre-qualification. The term is probably used less often, but the technique remains, at least here.