Financing

PRE-QUALIFICATION AND PRE-APPROVAL

Many buyers apply for a loan and obtain approval before they find the home they want to buy. Why?

Pre-qualifying will help you in the following ways:

1. Generally, interest rates are locked in for a set period of time. You will know in advance exactly what your payments will be on offers you choose to make.

2. You won’t waste time considering homes you cannot afford.

Pre-approval will help you in the following ways:

1. A seller may choose to make concessions if they know that your financing is secured. You are like a cash buyer, and this may make your offer more competitive.

2. You can select the best loan package without being under pressure.

How Much Home Can You Afford?

There are three key factors to consider:

1. The down payment

2. Your ability to qualify for a mortgage

3. The closing costs associated with your transaction.

Down Payment Requirements:

Most loans today require a down payment of between 3.5% and 20.0% depending on the type and terms of the loan. If you are able to come up with a 20-25% down payment, you may be eligible to take advantage of special fast-track programs and possibly eliminate mortgage insurance.

Closing Costs:

You will be required to pay fees for loan processing and other closing costs. These fees must be paid in full at the final settlement, unless you are able to include them in your financing. Typically, total closing costs will range between 2-5% of your mortgage loan.

The Ten Commandments…When Applying For A Home Loan

1. Thou shalt not change jobs, become self-employed or quit your job.

2. Thou shalt not buy a car, truck or van (or you may be living in it)!

3. Thou shalt not use charge cards excessively or let your accounts fall behind.

4. Thou shalt not spend money you have set aside for closing.

5. Thou shalt not omit debts or liabilities from your loan application.

6. Thou shalt not buy furniture.

7. Thou shalt not originate any inquiries into your credit.

8. Thou shalt not make large deposits without first checking with your loan officer.

9. Thou shalt not change bank accounts.

10. Thou shalt not co-sign a loan for anyone.

Mortgage lenders may rerun your credit before closing in order to be certain that nothing has affected your debt-to-income ratio, meaning that they want to make sure that you can still afford the payments! Breaking these commandments could result in disaster.

Ready to get started? Contact a lender today to start the preapproval process.

John Schutze

David McMillan

DHI Mortgage

Austin Real Estate News And Opinion Blog

Financing