Always get Pre-Approved by a Lender!
In todays Central Texas real estate market its extremely important to get pre-approved by a lender prior to starting your property search. First off, most people think they know what they can afford, but a lender is going to tell you what you can afford. Its also nice to know what your budget is based on your pre-approval from your lender. Being pre-approved at the beginning of your property search will save you and your REALTOR® a lot of time by focusing your search on properties that fit your pre-approved loan amount.
A pre-approval is simply a commitment from a lender stating a borrower should qualify for a certain loan amount based on the their income and credit information. When you’re pre-approved you will also receive a letter from your lender stating such. Most pre-approval letters are good for 60 – 90 days. You will need this pre-approval letter when submitting an offer, especially in a competitive real estate market. An offer with a pre-approval letter attached is taken much more seriously than an offer with no pre-approval information.
In order to get pre-approved you will need to contact a lender. Your REALTOR® at Longhorn Realty can refer a lender to you if you don’t have one. Pre-approvals usually don’t take long and can be completed in as little as one to two days. The lender will need documents from you such as: W2s, paystubs, tax returns, bank statements, investment statements (stocks, bonds, IRAs), landlord info or current mortgage docs and etc.
Your lender will have to pull a credit report on all borrowers and sometimes there’s a fee associated with that. The better your credit score the better your interest rate will be on your mortgage. A score at 720 and above will get you the best rates.
If you can’t get pre-approved your lender will let you know why. The most common reasons are: low credit score, errors on credit report, debt-to-income ratio too high and increased down payment needed to qualify for desired home budget.
Pre-approvals aren’t just for when you’re buying a home. It’s best to be pre-approved on any real estate purchase including land, ranches and even lots. If you plan to borrow money for your purchase you should always take the extra step to be pre-approved.
Click here to read why being Pre-Approved is better than being Pre-Qualified.