Why Get Pre-Approved by a Lender
Getting 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. Most people think they know what they can afford, but a lender is going to tell you what you can afford. 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 the budget set by your lender. After all, you can only purchase what your lender will approve and finance.
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 a pre-approval letter when submitting an offer on a property, especially in a mutliple offer situation. 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 such as your: W2s, paystubs, tax returns, bank statements, investment statements (stocks, bonds, IRAs), landlord info or current mortgage docs and etc.
Your lender pulls 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, marks on credit report, debt-to-income ratio too high and increased down payment needed to qualify for desired home budget.