Mortgage pre-approval questions

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F150HD
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Mortgage pre-approval questions

Post by F150HD » Mon Jun 25, 2018 10:44 am

Did a search, but didn't want to post this at the end of another thread and have it get buried or go unanswered.

Looking to possibly relocate in next year-ish. Want pre-approval letter in hand in the event something pops up I really like.

1) My question: what companies or online sites do people use to get 'preapproved'?

I went thru a local credit union before (for current home) but want to go a different route.

2) I see one can pre-qualify on (for example) Zillow? or Realtor.com? that bad/good?

3) Also, is a pre-qualification only good in the state you live in? (what if you live on the border between 2-3 states and may buy in either, does it matter?)

4) How long is a pre-qual good for? what does it take to 'renew' it?

I see articles like this but don't know anything about the companies it references:

https://www.nerdwallet.com/mortgages/mo ... e-approval

Image

5) Also many have frozen their credit after the Equifax debacle....so if going online how does one know which bureau to unfreeze to get pre-approved? (I assume the company would ask but...)

**6) When getting a 'preapproval letter" I have heard to get multiple letters listing different amounts so a buyer doesn't know how much you can actually spend (i.e. if you qualify for $200k get letters for $150k, $175k and $200k use the one you see fit), is this sensible?

Thanks for any input. Currently own, but would purchase/move/sell current residence as I don't want to temporarily 'relocate' to some apartment.

Charon
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Re: Mortgage pre-approval questions

Post by Charon » Mon Jun 25, 2018 12:29 pm

I can't answer all your questions, but you need to contact lenders about preapproval. They're the ones who issue it, so they'll have details about how long it's good for and to what region it applies. I don't see any benefit to going through Zillow, other than to get ideas for what lenders are out there. (Like you, I went through my local CU for preapproval, but I would do it again. In your case I'd shop around for a good rate and terms.)

I do imagine different lenders might preapprove you for somewhat different amounts. I would not go by these amounts. Do your own calculation about your finances and how much you think you can really afford. Likely you will be more conservative than the lenders. Ask for preapproval up to the amount you've calculated as affordable. (As someone who already owns a home, you should have a very good idea of the true cost and what your budget can support.)

So I think your primary question is really number 1: what lenders do people use?

Caveat: if your relocation involves a job change, that might complicate preapproval.

feehater
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Re: Mortgage pre-approval questions

Post by feehater » Mon Jun 25, 2018 12:37 pm

There's a difference between pre-qualification and pre approval. The former is basically useless. The latter involves basically doing a simple mortgage application including showing your bank statements and a hard credit check. It only is valid for 60-90 days. Therefore, you shouldn't do it too early for no reason since every time you renew it they'll do another credit check. In our hot market, our realtor argued that a pre-approval letter was more impressive if it was from a local lender with a track record of closing on time, and not some online place like quicken. Don't know whether that was true or not. Our lender did prefer to match the letter to the offer, so as not to tip one's hand on what you could actually afford to pay. For this reason, most lenders are on call 7 days a week to update the letters when you decide to make an offer.

Best of luck!

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F150HD
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Re: Mortgage pre-approval questions

Post by F150HD » Mon Jun 25, 2018 12:38 pm

Charon wrote:
Mon Jun 25, 2018 12:29 pm
I can't answer all your questions, but you need to contact lenders about preapproval. They're the ones who issue it, so they'll have details about how long it's good for and to what region it applies. I don't see any benefit to going through Zillow, other than to get ideas for what lenders are out there. (Like you, I went through my local CU for preapproval, but I would do it again. In your case I'd shop around for a good rate and terms.)

I do imagine different lenders might preapprove you for somewhat different amounts. I would not go by these amounts. Do your own calculation about your finances and how much you think you can really afford. Likely you will be more conservative than the lenders. Ask for preapproval up to the amount you've calculated as affordable. (As someone who already owns a home, you should have a very good idea of the true cost and what your budget can support.)

So I think your primary question is really number 1: what lenders do people use?

Caveat: if your relocation involves a job change, that might complicate preapproval.
Thanks. Yes no job change, and yes #1 is the crux of it. I don't know if folks use the places in the photo above (snipped from Nerdwallet), just not sure. Its not like one applies for a mortgage everyday (or every 10 years) so worth asking what many/most use in todays market. Thanks again.

ytrewq
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Re: Mortgage pre-approval questions

Post by ytrewq » Mon Jun 25, 2018 1:23 pm

1) My question: what companies or online sites do people use to get 'preapproved'?
Maneesh: Nearly all mortgage lenders (Banks, Credit Unions, Direct Lenders) provide pre-approval. Lenders will need pay stubs, bank statement showing funds available for down payment and closing costs. Sites like Zillow/Realtor do NOT provide pre-approval. They just route your request to a lender who can perform underwriting. Better to get a pre-approval from a well-known Lender so seller feels psychologically more confident about underwriting process and your ability to secure loan (esp. if there are offers from multiple buyers). Once your offer is accepted you will be doing rate shopping to get actual loan from the lender with best rates and lowest fee (combination) on the day you want to apply for actual loan.

2) I see one can pre-qualify on (for example) Zillow? or Realtor.com? that bad/good?
Maneesh : See above.

3) Also, is a pre-qualification only good in the state you live in? (what if you live on the border between 2-3 states and may buy in either, does it matter?)
Maneesh: Mortgage Rates depends on county/state hence you may need to check with Lender on which locations the same letter will suffice.

4) How long is a pre-qual good for? what does it take to 'renew' it?
Maneesh: Most pre-approvals are good for 6-months. Same underwriting process (review of credit history, pay stubs, bank statement showing funds for down payment and closing costs) for renewal.

5) Also many have frozen their credit after the Equifax debacle....so if going online how does one know which bureau to unfreeze to get pre-approved? (I assume the company would ask but...)
Maneesh: All 3-credit unions have online functionality where you login with PIN provided at time of freeze to unfreeze for a specific period of time (say 3-days, 3-months, 6-months). You can do a unfreeze for any entity wanting to check your credit history for a specific duration or for one specific entity. After unfreeze period is over the credit history auto-reverts to freeze. Most lenders will pull all 3 credit scores and you can call loan officer and he/she can tell you the scores they received from all 3 lenders (so no need to pay $100 to see the 3 credit scores)

**6) When getting a 'preapproval letter" I have heard to get multiple letters listing different amounts so a buyer doesn't know how much you can actually spend (i.e. if you qualify for $200k get letters for $150k, $175k and $200k use the one you see fit), is this sensible?
Maneesh: Ultimately YOU decide how much you want to pay for the house irrespective of what's the authorized amount on your pre-approval and what the seller is asking. Similarly what the seller will accept depends on competing offers from other buyers and not based on your authorized limit. My suggestion would be to get an approval for slightly higher amount than what you plan for, so just in case a really nice house which is 2% - 5% higher than your plan comes-up, you do not have to do last minute rush to increase the limit. You can request loan officer to issue other letters for lower amounts in case you do not want to show your max affordability.

Also once you apply for loan the Lender will perform credit history check twice - once when actual loan for a specific home is applied and again the week prior to closing date.
Last edited by ytrewq on Mon Jun 25, 2018 1:40 pm, edited 4 times in total.

daheld
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Re: Mortgage pre-approval questions

Post by daheld » Mon Jun 25, 2018 1:28 pm

Real estate agents get a hard time around here, but this was another reason I liked having the guidance of a RE agent during our recent buying and selling of homes. We trusted her guidance. She has a local lender (though they have branches nationwide I believe, I know they have a regional, multi-state presence) that she prefers to work with, though she will absolutely work with any lender a buyer chooses. She set us up with the lending agent and it was all handled from there. I could not have asked for better service.

My point: find a highly reviewed, trusted, reputable realtor, work with them, and ask them who they recommend to use as a lender. They'll handle all of this for you. To me, it's just an unnecessary point of stress I don't want to think about more than I have to. Getting all 17 billion documents to the lender was enough.

ytrewq
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Re: Mortgage pre-approval questions

Post by ytrewq » Mon Jun 25, 2018 1:36 pm

Just a caveat - Many realtors receive commission from Lenders to bring business so do not limit yourself to what realtor advices. Just spend few mins to do rate shopping on bankrate.com and zillow.com and call 3-5 lenders with best rates to get actual rate quote which may vary slightly than what is shown online based on general parameters and with 30/60-day rate lock. Also rates vary for paying Property Taxes and Homeowners Insurance with or without Escrow so ask loan officer which options gives best rate and also do break-even calculation for lowering rates by buying points.

daheld
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Re: Mortgage pre-approval questions

Post by daheld » Mon Jun 25, 2018 1:45 pm

ytrewq wrote:
Mon Jun 25, 2018 1:36 pm
Just a caveat - Many realtors receive commission from Lenders to bring business so do not limit yourself to what realtor advices. Just spend few mins to do rate shopping on bankrate.com and zillow.com and call 3-5 lenders with best rates to get actual rate quote which may vary slightly than what is shown online based on general parameters and with 30/60-day rate lock. Also rates vary for paying Property Taxes and Homeowners Insurance with or without Escrow so ask loan officer which options gives best rate and also do break-even calculation for lowering rates by buying points.
Yes, absolutely. My recommendation to use a realtor should not be misconstrued to follow them blindly. I'm sure my realtor gets a little commission from the lender for recommending them. But the service we received from the lender was phenomenal, and the rate we got was right where it should've been based on the other lenders I checked with and what all the online rate quotes showed.

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Meg77
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Re: Mortgage pre-approval questions

Post by Meg77 » Mon Jun 25, 2018 2:19 pm

Banker here. You do NOT need a preapproval letter at this stage. Honestly you may not need one at all, but many realtors convince sellers that they are good to see (in reality they are worth about as much as the paper they are printed on). So when collecting offers, it makes them feel good to see a letter from a lender saying that the potential buyer is qualified to borrow enough to buy that particular home. In general, the more well known the lender is to the sellers' agent, the better. Online lenders aren't going to be as trusted in general.

And while the preapproval isn't good only in the state you live in, lenders will ask where the property is that you want to purchase. Many lenders don't lend in all 50 states, or they have different down payment requirements in different zip codes. This is another reason you want to have an actual home or at least a city identified when you request the preapproval.

Preapproval letters are dated and typically reference the exact address and purchase price of the home you are making an offer on. So a 6 month old letter in a generic amount is not going to add much to your offer. After all you could have lost a job or spent your savings or racked up debt in the interim. They don't typically have an expiration date because they aren't actually a commitment to lend or for you to borrow. They are based on estimated income ratios and undocumented savings and debt levels. Again, they don't actually mean you will get approved for a mortgage once they dig into everything.

I would recommend choosing the lender you actually want to use and then getting the preapproval through them. This will minimize the number of times your credit is pulled and also your hassle factor for sending in financials, etc. Plus the mortgage lender will be more willing to update the letter repeatedly if s/he thinks they will actually get your business at the end of the day.

FYI most banks request 24-48 hours to generate a preapproval letter. So if you make an offer you should be OK to get a preapproval in pretty short order anyway.
"An investment in knowledge pays the best interest." - Benjamin Franklin

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jfn111
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Re: Mortgage pre-approval questions

Post by jfn111 » Mon Jun 25, 2018 2:33 pm

If your interested in an on-line lender we have had good luck with Quicken Loans. They have been very thorough and we haven't had a deal fall apart, yet, with them.
As far as preapproval letters I like to have my buyers get them without a purchase price. I'll usually call the loan officer myself and have them issue a current one that just says the client is qualified to buy 123 Main St. (This way I have talked with the loan officer and know they are truly preapproved.)

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F150HD
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Re: Mortgage pre-approval questions

Post by F150HD » Mon Jun 25, 2018 3:50 pm

ytrewq wrote:
Mon Jun 25, 2018 1:23 pm
1) My question: what companies or online sites do people use to get 'preapproved'?
Maneesh: ....
Thanks for info. Yes, already aware how to 'unfreeze' credit to apply for a loan, just wasn't sure where most folks looked first. Thanks.

kodachrome
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Re: Mortgage pre-approval questions

Post by kodachrome » Mon Jun 25, 2018 9:37 pm

I do not think that a pre-approval letter means much to sellers these days.

I think it will be much better shopping around first, and submit a formal loan application to lenders as soon as you decide which particular house you would like to purchase.

Mortgage loan processing varies by each institution. In any point, they are required to process your request as a formal application with all tightened federal and state regulations for consumer loans including home mortgage loans.

For the application processing and credit decision, following documents are needed for the least.

1. Last 2 years federal income tax return copies with W-2
(alimony, child-support expenses can be checked out from here)
2. Recent pay-stub for last 2 months
3. Your authorization for credit search
4. 3-month recent bank-statement (showing your down-payment is ready)
5. Optionally, annual property tax amount & fire hazard insurance quotes for premium
6. "a draft sales contract" with sale amount, down-payment or deposit, mortgage contingency clause (with loan amount & lender information)

Within 3 days, you will hear back from the lender about interest rates, loan terms, point charges, other loan term & conditions subject to the appraisal value with any additional documents required.

The loan officer who just reviewed your documents might be happy to assist you as he already know knows your creditworthiness at this point.

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F150HD
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Re: Mortgage pre-approval questions

Post by F150HD » Tue Jun 26, 2018 9:05 am

kodachrome wrote:
Mon Jun 25, 2018 9:37 pm
I do not think that a pre-approval letter means much to sellers these days.

I think it will be much better shopping around first, and submit a formal loan application to lenders as soon as you decide which particular house you would like to purchase.....
Thanks. Have a current mortgage so I understand the paperwork I need to submit, my question was where most got pre-approval online.

By the time one gathers all the necessary paperwork, submits, has credit pulled etc....it takes several days. Some homes here are gone within 12 hours of listing here. Waiting to apply for the loan when you find the home probably wouldn't help in this market unfortunately. Thanks.

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