I remember being a first time home buyer and the mystery that surrounded the transaction. This is the first post of a "Spring TX first time home buyer series". I hope this series will help to alleviate some of the home buying mystery.
The VERY FIRST step in the process is to get yourself pre-approved with a good lender. I'm not talking pre-qualified; I'm talking pre-approved. There is a difference between the two. In the days where anyone could get a loan this was not a big deal but those days are over.
What is a Pre-Qualification?
A prequalification is simply a meeting between a loan officer and a customer to determine what the mortgage needs of the customer are. Income and assets are not verified. The credit report may or may not be pulled. The information is not submitted to an underwriter. The lender does not receive enough information to make a credit decision.
What is a Pre-Approval?
Pre-approval includes a complete loan application. A credit report is pulled and asset and income are verified. The information is submitted to underwriters for "credit only" decision. Once you have been pre-approved your credit package can be used with any property. Final loan approval will be subject to the underwriter approving the property only. A pre-approval is normally good for 90 days. The borrower receives a written pre-approval letter. A true approval requires this income and asset documentation and credit reports are required on all loan types.
Being pre-approved in Spring TX gives you an edge when you start looking for your home. If you get in to the situation where there is more than one offer on a home it is often the person who is further along in the loan process who will get the home. I have even had the situation where the other offer was a little more but my seller preferred the person who had a true pre-approval.
The rules have TOTALLY changed in the mortgage industry. The products that lenders had for first time home buyers in Spring TX last year, maybe even last week are no longer available to the consumer which makes getting pre-approved for your loan more important than ever. Once you even think that you might be interested in purchasing a home you should call a lender. Even if the news is not good by going through the process you will know what you need to start working on and you can make a game plan to get your credit in order.
The days of a real estate transaction being dependent upon the creativity of a loose lender are finished. Down payments are back again and FHA loans are sometimes the only game in town with VA loans being about the only 100% loan. With all of this in mind getting yourself pre-approved before you ever start looking is more important than ever.
I am also attaching some Do's and Don'ts you might consider putting in to action when you start thinking about purchasing a Spring TX home.
Do's
- Do make all your payments on time. Your credit will be checked again right before you close.
- Do continue saving money. There are always additional expenses once you move and you will be glad for that savings.
- Do make deposits into your bank account on a regular basis. If you have any unusual deposits for large sums of money document them as the lender may need to verify the source.
Don'ts
- Do not co-sign for any loans for friends or family. That debt would be held against you.
- Do not decide this is the time to change banks; you can do that after you move in.
- Do not open ANY new accounts. Even though the new account has a $0 balance it may still affect your debt to income ratio.
- Do not buy a new car or new furniture!!! Wait until after you are in your new house then go shopping otherwise the debt could affect your debt to income ratio.
- Do not lender shop over the Internet. Each lender pulls a credit score and multiple hits on your credit report can cause your score to drop dramatically.
- Do not pull your own score and then decide you will check why accounts are still open or have balances. I did this myself and then had to write a note at closing to explain why I had all these hits on my credit
This is a Spring TX first time home buyers series and as I add additional post I will add the links. Please feel free to visit my prior post.
- Spring TX First Time Home Buyers Guide - Part 1 - Loan Pre-approval!
- Spring TX First Time Home Buyers Guide - Part 2 - The Web Search!
- Spring TX First Time Home Buyers Guide - Part 3 - The Home Search!
- Spring TX First Time Home Buyers Guide - Part 4 - What price do we offer!
- Spring TX First Time Home Buyers Guide - Part 5- The Home offer!
- Spring TX First Time Home Buyers Guide - Part 6 - The Texas option fee and your home inspection!
- Spring TX First Time Home Buyers Guide - Part 7 - The Title policy
- Spring TX First Time Home Buyers Guide - Part 8 - Why you need to live in an HOA!
- Spring TX First Time Home Buyers Guide - Part 9 - What to bring to your closing!
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If you are buying or relocating to Spring Texas and need help from a professional REALTOR®, Marchel can be reached at Marchel@AgentwithResults.com or by phone at 832-721-8332.
If you would like information about Spring TX please visit my websites at www.AgentwithResults.com and at www.ResultsRealtytx.com. The AgentwithResults site is rich in Content about Spring and the surrounding areas of Tomball, The Woodlands and Magnolia. If you prefer pictures with your content then visit my ResultsRealtyTX site.
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Thank you, Miss Marchel, for this wonderful post. This works in San Antonio as well as in Spring so I think I'll just reblog it since you left that option open. :o)
Wonderful post, Marchel. I would add do not make any major purchases, including furniture. We have had furniture as well as cars mess up the ratios. We only had to learn that lesson once :)
Sharon
Hi Marchel,
Great stuff for any buyer Your comment about "rules have TOTALLY changed in the mortgage industry..." so very true.
Hi Marchel,
I just flagged this as a recommended feature post. You have done an outstanding job laying this out and your details are clear and well organized.
I also bookmarked this post. Great Job.
Marchel great advice. Some buyers after the pre-approval will go out and buy a big ticket item not realizing this could change there ability to purchase.
Marchel, What good advice and written for a consumer. I love coming by here, I can always read and understand your posts which means others can as well!
Marchel, what a wonderful post! All true, it is such a good thing when buyers have pre approvals rather than prequals.
Great job, looking forward to the next in the series!
Hi Marchel, Great post ... good, factual information in plain language .. with the important explanation of "Why" one should do/not do something on the list --- and its impact on their going-forward transactions --- that is usually the piece people don't include in their "tutorials" ... you didn't miss it, tho!
Marchel, Great idea for a series! I remember the stress of purchasing our first home. There was so much we did not know. Thanks for taking the time to put some helpful information together.
Marchel Since we're both writing on the same topic it will be intersting to follow yours which shows how well qualified you are to write on the subject Karen
Marchel Since we're both writing on the same topic it will be intersting to follow yours which shows how well qualified you are to write on the subject Karen
Nicely done. I like the way your made this simple and easy to understand.
Excellent post Marchel, well written and easy to understand.
Marchel: I am going to try to email this back to myself. I sure wish I were eligible for this, I would buy me cottage up in Colorado somewhere.
Hi Marchel, seems like the real estate transaction has turned upside down over the past couple of years and all the rules have been rewritten. I bought my first home ten years ago and it was pre-qualify not pre-approve that is needed today.
Marchel, I love the list of do's and don't's - critical in these days. It seems like our series are a perfect complement to each other.
This is such important info, especially for first-time homebuyers who may not think twice about some of the "DONT'S"... and I need to remember to mention these, and not just make an assumption. Thanks for reminding ME (to remind them!)
SHIRLEY, Thanks! I'm honored that you re-blogged my post.
FRANK & SHARON, I added your not buying furniture to my list beside not buying a new car.
LYNDA, It is a different mortgage world out there than it was even 6 months ago.
WILLIAM, I appreciate your vote of confidence. It did not get a feature but you flagging it made me feel very good.
JENNIFER, I have this wonderful lender who scares them half to death and they completely quit shopping (lol). It can make the difference between getting a loan or not.
CAROLE, Thanks! I try to make my post easy to understand and I'm glad to hear that you feel they are.
ANDREA, Whew these are a lot of work. I just put my second post up. Now to start thinking about number 3.
JUDITH, Thanks! I have learned many of these by my clients doing them. I now have a wonderful lender who tells them exactly what they need to be doing to get their loan.
JOAN, Thanks for stopping by. I was trying to make this easy to understand as I have had so many people be confused about the two.
RICKI, Thanks that was my intent so I'm glad to see that it worked.
CARL & CEIL, A cottage in Colorado sounds nice about now but I KNOW that I would not like it there int he winter. Been there done that!!
TERAL, The funny thing is that it is more like it was when I bought my first home back in the 1980's. It is funny how that pendulum swings.
WILLIAM, I'm enjoying these series. The only problem I'm finding is that they take so long to write I don't have much time left to read them.
MARA, It is so sad when a first time home buyer does something that hurts them in getting a loan. I hope these tips will help that from happening.
Marchel: Great post. I especially like your do's and don't's list. The simpler things are made for first time buyers... the better. I look forward to the rest of our series. Very nicely done !
I read them out of order but this one is good too. Its important for first time home buyers to understand how important this step is because often they are so eager they just want to jump right into looking at homes but you have to take it one step at a time.
GREAT Post! My hat is off to you for a very well thought out and nicely written article. You're a gifted writer- keep it up.
Marchel - I started to write a series on buying a home and couldn't figure out whether to recommend pre-qualification or pre-approval, then I couldn't figure out whether the Internet research should come before the pre-approval. So in the end, I wrote a series about selling your home, which is where my expertise lies. I appreciate how difficult it is to write on the topic you choose. There are many different ways to approach this and you've create a clear and simple approach for homebuyers.
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