Steps To Get Pre-Approved for a Texas Mortgage
Buying a home is one of life’s biggest decisions. Whether you’re buying your first home, investing in real estate, or looking to upsize or downsize according to your family’s needs, it’s a major financial milestone.
Before you start touring properties or making offers, it’s essential to understand your financial readiness, especially if you’ll be taking out a home loan. That’s why we recommend securing a mortgage pre-approval early in your homebuying journey.
At First State Bank, we help make homeownership possible for Texans. If you’re ready to get pre-approved for a mortgage, contact us online or call us at 940-665-1711 to start your home loan pre-approval process today.
What Does It Mean To Be Pre-Approved for a Mortgage?
A mortgage pre-approval is an in-depth check that your lender will conduct to verify your financial status. Based on official documentation and their assessments, they can determine how much they are willing to lend you for a mortgage.
Pre-approval isn’t the same thing as prequalification. When you get prequalified for a mortgage, you only get a rough estimate based on your self-reported information. However, the amount provided in a home loan prequalification isn’t a loan approval or a guarantee that the lender will provide that amount.
In contrast, pre-approval requires documentation and a credit check. When you receive pre-approval, the provided amount can be much closer to an actual loan decision, depending on terms and conditions.
During the pre-approval process, your lender will review:
- Verified income documentation
- Credit score and detailed credit history
- Employment status and work history
- Debt-to-income ratio
- Existing assets, bank statements, and other relevant financial information
Pre-approval can take longer, as lenders need to verify your application. Because of the documented financial review, pre-approvals carry more weight with sellers and real estate agents. It demonstrates that you’re a serious buyer with the financial capability to complete your purchase.
Once completed, you’ll receive a formal pre-approval letter. You can use this when making an offer on a home. This can strengthen your position as a serious buyer, especially in a competitive market. Your pre-approval offer will be valid for 60 to 90 days, giving you enough time to shop for the best home for your needs.
Why Pre-Approval Matters
Whether you want to buy a property for personal use or as a real estate investment, we recommend getting pre-approved for a mortgage. Starting your homebuying process with an estimate helps you:
Establish a Realistic Homebuying Budget
Pre-approval gives you a realistic budget to work with. You can limit your search to homes within your price range, ensuring your payments are financially comfortable.
Strengthen Your Offer Among Other Buyers
Depending on where you’re house shopping, there may be more buyers than there are houses that meet your criteria. This means homeowners and their real estate agents can be very particular about the offers they entertain.
When you have pre-approval for a mortgage, you’re showing that you’re a serious buyer, not just someone casually browsing the real estate market. When you have a letter from a lender, you show that you’re ready to make a serious offer. This makes them more likely to entertain negotiations.
Move the Homebuying Process Faster
A mortgage pre-approval streamlines the entire mortgage process. If you see a house you like, you can put in an offer on the same day. In contrast, those who don’t have pre-approval will still need to gather documents, apply for a loan, and then wait for approval. By then, the home could be under contract with someone else.
For many buyers, having pre-approval puts them in a better position to negotiate. When sellers want to sell as soon as possible, pre-approved buyers ready to start the closing process are ideal.
Steps To Get Pre-Approved for a Mortgage
Pre-approval requires several documents and thorough checks. Staying organized and preparing ahead of time can make the process more straightforward.
Each lender has their own terms and conditions for mortgage applicants. However, here’s a general overview of how the process works:
Step 1: Review Your Financial Picture
Review your finances, including your income, monthly expenses, and debt. This is the best time to gather documentation that can help your application:
- Recent pay stubs
- W-2s or 1099s
- Tax returns for the past two years
- Bank statements
- Other documents relevant to your other loans, debts, and credit lines
- For self-employed individuals and business owners, additional documentation like business tax returns and profit and loss statements
Your credit history will also impact your ability to get bigger loans and better interest rates. Lenders use your credit score to help evaluate how you manage debt and determine potential loan terms. Before you apply, review your credit report to get a better picture of your financial health.
At First State Bank, we understand that every financial journey is unique. Even if your credit score isn’t perfect, you may still qualify for other loan programs, subject to credit approval.
Step 2: Choose the Right Loan Option
Not all home loans are the same. Shop around to explore different loan options that could offer you the best deals. Here are a few examples:
- Conventional Loans: These are the standard type of home loans, best for those with established credit and steady income. Depending on your credit score and the other factors listed above, you may receive flexible terms and competitive rates. They’re best for those who want the predictability of uniform monthly payments.
- Federal Housing Administration Loans: These are government-backed loans that allow qualified borrowers to make smaller down payments. FHA loans are best for those with limited savings or credit history, especially among first-time buyers who need extra flexibility to achieve homeownership.
- VA Loans: These are loans backed by the U.S. Department of Veterans Affairs to help eligible veterans and active-duty service members purchase a home. It provides favorable terms, like no required down payment or private mortgage insurance.
- Land and Lot Loans: Best for those looking to purchase land to build a residential or commercial property in the future. It’s best for those who want to purchase land now and build when the timing and budget are right.
- Home Equity Loans: This option is available to existing homeowners who want to tap into their home’s equity to borrow against the value of their home. You can use the funds for remodeling, debt consolidation, or major purchases.
Step 3: Submit Your Information for Review
Visit your local First State Bank branch to talk to one of our experienced mortgage advisors. They will review your application and determine how much you can borrow.
If everything checks out, they’ll provide a pre-approval letter that states the loan amount you qualify for. This letter will be valid for 60 to 90 days. Use it to browse listings and find the right home for your needs.
Become a Property Owner, Start Your Homebuying Journey Today!
Getting pre-approved is the foundation for smart home financing. It helps you understand your options, set realistic goals, and start your home search. Let First State Bank guide you through the process – we’ve helped plenty of Texans make buying real estate properties more accessible for over a century.
Call us today at 940-665-1711 or contact us online to speak with a local mortgage advisor and take your first step toward homeownership.
Disclaimer: All loans are subject to credit approval. Terms, conditions, and availability may vary by location and borrower qualification. Information provided in this article is for general educational purposes only and does not constitute financial or legal advice.