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The Mortgage Process

Unless you plan to pay cash for your purchase, it’s a great idea to get pre-qualified before you begin looking for a property. In order to make an offer on a property, you will need a pre-qualification letter from a lender, so you’ll have to go through pre-qualification sooner or later. Sooner than later make sense because your mortgage pre-qualification not only gives you buying power, it also answers a number of questions:

How much will you need to put down on a property & how do different down payment amounts affect your mortgage rate & any PMI (Mortgage Insurance.)
What do prospective monthly payments look like for different priced homes?
How do different down payment amounts affect your monthly payment for a specific price point?
Answering these questions helps you determine your price range and gets us off to a great start on your search.
If you would like a referral to a great lender, just let us know. When looking for a lender, we recommend the following:
Go Local! Local mortgage bankers rely on referrals to get most of their business, so they have to protect their local reputation. A local loan originator (LO) will be much more motivated to close your loan on time & with little hassle than someone in Hoboken, NJ.
Use an LO & bank who specialize in mortgages. These types of LO’s are typically 100% commission jobs. So, they’re highly motivated to get you approved & to make sure your loan closes on time.
Use someone w/ a strong online presence, specifically with reviews. If your lender is rated well on Yelp, Google+, or AngiesList, that lender will want to protect his/her rating (and hopefully get a new, positive review from you.)
Stay away from national retail banks like Wells Fargo, Bank of America, Chase, etc… You might already bank w/ a national bank, and it might seem natural to go to them for a mortgage. In our experience, their mortgage departments are typically staffed with lower paid employees who aren’t heavily incentivized, which means they have little motivation to do a good job for you.
If you’re hesitant to speak with a lender now, you can get started on your own by taking the following steps:
  1. Check your credit score at CreditKarma.com. Typically, you’ll need a score in the low to mid 600s to qualify (with some exceptions for FHA & VA financing.) The higher your credit score, the better rate the bank will offer you. You’ll get the most attractive rate with a score in the 700s.
  2. Use an online mortgage calculator or download an app to your phone. Make sure that it calculates Principal, Interest, Taxes, & Insurance (PITI) which is your total monthly payment. Bear in mind that Texas has higher property taxes than most calculators will assume. For Android, we recommend using Karl’s Mortgage Calculator and we recommend Quicken Loans app for iPhone (though we strongly recommend against using Quicken Loans.)
  3. Calculate your Debt to Income Ratio (DTI.) This is your total monthly debt load (student loans, car payments, minimum credit cards, etc) divided by your monthly pre-tax income. Your lender will approve you for roughly 50% DTI, so you can add in prospective mortgage payments (PITI) to get an idea for what you’ll qualify for.

As you can see, the mortgage pre-qualification process can be a little complicated, which is why we think it’s best to speak with a lender early in the process. We’re happy to help in any way we can!

Over 300 Client Reviews
Yelp
My wife and I relocated to Austin from the east coast and didn't know a realtor in town, so looked online. We called a few different people and really seemed to click with Eric. He knows Austin very well, which is what we really cared about, since we knew little about the various Austin neighborhoods.…
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Google+
Eric is such a fantastic realtor! I had a distressed home to sell and Eric gave me the advice I needed to list it at a price that would sell. His suggested price was right on, and the house sold in a week! Eric was always available and replied quickly to all of our questions.…
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Zillow
My wife and I found Eric online in 2011 when we were considering moving to Austin. Eric was very helpful showing around various neighborhoods during my business trips that made my decision to move to Austin easier. Unlike most agents, Eric also helped us find an apartment for around 6 months so that we could…
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