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Beating the Competition in Austin with a Pre-Approved Home Loan

The Austin, TX.  housing market is red hot, and you’ll have to compete with other buyers for a home.  But with a pre-approved loan from a lender, you’ll give yourself a head-start in the race for a home you love.  Pre-approval also comes in handy when you’re dipping your toe into the market. Even in a soft market, you’ll have to compete with other buyers if you find a home in excellent condition with an attractive price tag.

What is a pre-approved loan?

mortgage appEvery potential homebuyer should start the process of looking for a home with a visit to a reputable mortgage lender. While a lender can give you a pre-qualification for a home loan based on your credit score and your stated income and assets, a home seller wants to see you’re completely pre-approved for a loan.

To find a lender who will help land your dream home, try a pre-approved loan service like the one featured on the® individual listings page. By checking the box that says, “I want to get pre-approved by a lender” you’ll be connected with up to three lenders right away.

A pre-approval requires complete documentation of your finances. Be prepared to provide these piece of information:

  • A review of your credit report
  • Verification of your income and employment history
  • Bank statements to prove you have the resources for a down payment, closing costs and cash reserves
  • A calculation of your debt-to-income ratio based on your gross monthly income and the minimum payment on all recurring debts

Your lender will review your documents and discuss loan options with you, so you’re prepared to close as quickly as possible once you have a signed contract. The pre-approval will be based on all elements of the home loan other than the specific property you intend to buy.

The lender will tell you the maximum loan amount you can qualify for, but you should also be certain you understand the monthly payments associated with each loan—don’t get in over your head.

After you have a pre-approved loan letter in hand, it’s important to maintain the same credit profile so that you can be certain that your loan approval is valid.

Be sure to keep a paper trail of all unusual deposits and pay your bills on time. Don’t apply for new credit, close any credit cards, or take on new debt—these actions can impact your credit score and force your lender to re-check your credit before closing.

How a pre-approved loan can help you compete

If you’re competing with other buyers, a mortgage pre-approval makes your offer stronger. While many buyers today have a pre-approval handy, you can use yours to win the bidding war by providing a financial statement along with a pre-approval letter from your lender with your offer.

If your pre-approval letter is for an amount above the asking price for the home, this will give the sellers confidence in your ability to easily finalize the loan. You also can ask your lender to call the listing agent directly to emphasize your ability to close the deal and to discuss how quickly the contract can go to settlement.

Most real estate contracts include a contingency: the offer depends on the buyer obtaining financing. If you have a strong pre-approval letter and feel your lender is dependable, you can remove the financing contingency or shorten the contingency term.

Sellers are happy to see an offer without a financing contingency, because it proves the buyer has confidence the loan will close on time. However, waiving this contingency can be risky because if your financing doesn’t come through you could lose your earnest money deposit and even run the risk of being sued by the sellers.

A shorter contingency might be safer and still garner you the attention and confidence of the sellers in a competitive situation.

There are many great Austin area homes for sale. Click here to perform a full home search, or if you’re thinking of selling your home, click here for a FREE Home Price Evaluation so you know what buyers will pay for your home in today’s market.

You may also call us at (512) 537-6739 for a FREE home buying or selling consultation, so that we may answer any of your real estate questions.


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