First-timer shopping for mortgage, compressed timeline w/ odd job situation

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
wxturtle
Posts: 18
Joined: Tue Apr 18, 2017 10:01 am

First-timer shopping for mortgage, compressed timeline w/ odd job situation

Post by wxturtle » Sun Jul 29, 2018 4:21 pm

Totally overwhelmed by this whole process.

Just went under contract on a house in PA Friday. We are currently out of state (CA), but moving in a few months. We were preapproved from a local bank a few weeks ago just because our realtor had a good working relationship with them and just wanted a letter we could show to prospective sellers.

According to our realtor, now that we are under contract, we have 7 days to begin the formal approval process with a lender. I assume I have these 7 days to "shop around" for a mortgage.

Further complicating things, we had to negotiate a long closing period (not until mid-October) since we are moving to PA so I can start a new position in mid-January. So we are beyond the standard 60-day lock. Even though my wife/I make decent $$$ currently here in CA, the lender we spoke to re: the pre-approval mentioned we might not get as much weight with our current pay stubs since we'd have to lean on the offer letter for FHA loans (90 day rule?).

Couple other notes. We have excellent (780+) credit and are looking at a 30-year fixed loan (no jumbo). Probably putting 15% down, although it'll be somewhere between ~12% and 20%.

So a few questions for those who may have expertise...

1.) Is this "7 day" thing after going under contract standard? I hadn't really heard about it until we closed.
2.) How the heck do I "shop" for a mortgage? I can see rates for 4-5 banks on like Bankrate, do I just apply for 4-5 loans? Do I call lenders and say "I have great credit, this is how much of a mortgage I need, what can you do?" How do I know that things like closing costs, etc. on "good faith estimates" won't change massively?
3.) How do I handle rate locking when I am applying for a mortgage > 60 days out from closing?

Dottie57
Posts: 4646
Joined: Thu May 19, 2016 5:43 pm

Re: First-timer shopping for mortgage, compressed timeline w/ odd job situation

Post by Dottie57 » Mon Jul 30, 2018 9:31 am

wxturtle wrote:
Sun Jul 29, 2018 4:21 pm
Totally overwhelmed by this whole process.

Just went under contract on a house in PA Friday. We are currently out of state (CA), but moving in a few months. We were preapproved from a local bank a few weeks ago just because our realtor had a good working relationship with them and just wanted a letter we could show to prospective sellers.

According to our realtor, now that we are under contract, we have 7 days to begin the formal approval process with a lender. I assume I have these 7 days to "shop around" for a mortgage.

Further complicating things, we had to negotiate a long closing period (not until mid-October) since we are moving to PA so I can start a new position in mid-January. So we are beyond the standard 60-day lock. Even though my wife/I make decent $$$ currently here in CA, the lender we spoke to re: the pre-approval mentioned we might not get as much weight with our current pay stubs since we'd have to lean on the offer letter for FHA loans (90 day rule?).

Couple other notes. We have excellent (780+) credit and are looking at a 30-year fixed loan (no jumbo). Probably putting 15% down, although it'll be somewhere between ~12% and 20%.

So a few questions for those who may have expertise...

1.) Is this "7 day" thing after going under contract standard? I hadn't really heard about it until we closed.
2.) How the heck do I "shop" for a mortgage? I can see rates for 4-5 banks on like Bankrate, do I just apply for 4-5 loans? Do I call lenders and say "I have great credit, this is how much of a mortgage I need, what can you do?" How do I know that things like closing costs, etc. on "good faith estimates" won't change massively?
3.) How do I handle rate locking when I am applying for a mortgage > 60 days out from closing?
Is the 7 day thing in yourpurchase agreement?

wxturtle
Posts: 18
Joined: Tue Apr 18, 2017 10:01 am

Re: First-timer shopping for mortgage, compressed timeline w/ odd job situation

Post by wxturtle » Mon Jul 30, 2018 12:05 pm

Dottie57 wrote:
Mon Jul 30, 2018 9:31 am
wxturtle wrote:
Sun Jul 29, 2018 4:21 pm
Totally overwhelmed by this whole process.

Just went under contract on a house in PA Friday. We are currently out of state (CA), but moving in a few months. We were preapproved from a local bank a few weeks ago just because our realtor had a good working relationship with them and just wanted a letter we could show to prospective sellers.

According to our realtor, now that we are under contract, we have 7 days to begin the formal approval process with a lender. I assume I have these 7 days to "shop around" for a mortgage.

Further complicating things, we had to negotiate a long closing period (not until mid-October) since we are moving to PA so I can start a new position in mid-January. So we are beyond the standard 60-day lock. Even though my wife/I make decent $$$ currently here in CA, the lender we spoke to re: the pre-approval mentioned we might not get as much weight with our current pay stubs since we'd have to lean on the offer letter for FHA loans (90 day rule?).

Couple other notes. We have excellent (780+) credit and are looking at a 30-year fixed loan (no jumbo). Probably putting 15% down, although it'll be somewhere between ~12% and 20%.

So a few questions for those who may have expertise...

1.) Is this "7 day" thing after going under contract standard? I hadn't really heard about it until we closed.
2.) How the heck do I "shop" for a mortgage? I can see rates for 4-5 banks on like Bankrate, do I just apply for 4-5 loans? Do I call lenders and say "I have great credit, this is how much of a mortgage I need, what can you do?" How do I know that things like closing costs, etc. on "good faith estimates" won't change massively?
3.) How do I handle rate locking when I am applying for a mortgage > 60 days out from closing?
Is the 7 day thing in yourpurchase agreement?
Yes, our realtor said that is pretty standard (at least in PA) since sellers want to ensure you are serious about being credit-worthy versus being under contract for 60 days and constantly scrambling to find someone to underwrite.

Dottie57
Posts: 4646
Joined: Thu May 19, 2016 5:43 pm

Re: First-timer shopping for mortgage, compressed timeline w/ odd job situation

Post by Dottie57 » Mon Jul 30, 2018 1:11 pm

wxturtle wrote:
Mon Jul 30, 2018 12:05 pm
Dottie57 wrote:
Mon Jul 30, 2018 9:31 am
wxturtle wrote:
Sun Jul 29, 2018 4:21 pm
Totally overwhelmed by this whole process.

Just went under contract on a house in PA Friday. We are currently out of state (CA), but moving in a few months. We were preapproved from a local bank a few weeks ago just because our realtor had a good working relationship with them and just wanted a letter we could show to prospective sellers.

According to our realtor, now that we are under contract, we have 7 days to begin the formal approval process with a lender. I assume I have these 7 days to "shop around" for a mortgage.

Further complicating things, we had to negotiate a long closing period (not until mid-October) since we are moving to PA so I can start a new position in mid-January. So we are beyond the standard 60-day lock. Even though my wife/I make decent $$$ currently here in CA, the lender we spoke to re: the pre-approval mentioned we might not get as much weight with our current pay stubs since we'd have to lean on the offer letter for FHA loans (90 day rule?).

Couple other notes. We have excellent (780+) credit and are looking at a 30-year fixed loan (no jumbo). Probably putting 15% down, although it'll be somewhere between ~12% and 20%.

So a few questions for those who may have expertise...

1.) Is this "7 day" thing after going under contract standard? I hadn't really heard about it until we closed.
2.) How the heck do I "shop" for a mortgage? I can see rates for 4-5 banks on like Bankrate, do I just apply for 4-5 loans? Do I call lenders and say "I have great credit, this is how much of a mortgage I need, what can you do?" How do I know that things like closing costs, etc. on "good faith estimates" won't change massively?
3.) How do I handle rate locking when I am applying for a mortgage > 60 days out from closing?
Is the 7 day thing in yourpurchase agreement?
Yes, our realtor said that is pretty standard (at least in PA) since sellers want to ensure you are serious about being credit-worthy versus being under contract for 60 days and constantly scrambling to find someone to underwrite.
It s not found in my state. But many people are pre-approved before purchasing.

User avatar
Tamarind
Posts: 1162
Joined: Mon Nov 02, 2015 2:38 pm

Re: First-timer shopping for mortgage, compressed timeline w/ odd job situation

Post by Tamarind » Mon Jul 30, 2018 1:24 pm

This is not what you asked for but one of your options is to back out of the contract and rent when you initially move there. Then you can make a home purchase with a time frame that works.

I can't help with 1) and 3), but for #2, you probably don't want to apply for multiple loans at once. Each ping will slightly reduce your credit score. Ask for quotes first and compare their standard terms to choose. Then only apply for one.

It will help that you don't currently own and have no existing mortgage. But be careful about telling lenders you are about to change jobs.

wxturtle
Posts: 18
Joined: Tue Apr 18, 2017 10:01 am

Re: First-timer shopping for mortgage, compressed timeline w/ odd job situation

Post by wxturtle » Mon Jul 30, 2018 1:37 pm

Dottie57 wrote:
Mon Jul 30, 2018 1:11 pm
wxturtle wrote:
Mon Jul 30, 2018 12:05 pm
Dottie57 wrote:
Mon Jul 30, 2018 9:31 am
wxturtle wrote:
Sun Jul 29, 2018 4:21 pm
Totally overwhelmed by this whole process.

Just went under contract on a house in PA Friday. We are currently out of state (CA), but moving in a few months. We were preapproved from a local bank a few weeks ago just because our realtor had a good working relationship with them and just wanted a letter we could show to prospective sellers.

According to our realtor, now that we are under contract, we have 7 days to begin the formal approval process with a lender. I assume I have these 7 days to "shop around" for a mortgage.

Further complicating things, we had to negotiate a long closing period (not until mid-October) since we are moving to PA so I can start a new position in mid-January. So we are beyond the standard 60-day lock. Even though my wife/I make decent $$$ currently here in CA, the lender we spoke to re: the pre-approval mentioned we might not get as much weight with our current pay stubs since we'd have to lean on the offer letter for FHA loans (90 day rule?).

Couple other notes. We have excellent (780+) credit and are looking at a 30-year fixed loan (no jumbo). Probably putting 15% down, although it'll be somewhere between ~12% and 20%.

So a few questions for those who may have expertise...

1.) Is this "7 day" thing after going under contract standard? I hadn't really heard about it until we closed.
2.) How the heck do I "shop" for a mortgage? I can see rates for 4-5 banks on like Bankrate, do I just apply for 4-5 loans? Do I call lenders and say "I have great credit, this is how much of a mortgage I need, what can you do?" How do I know that things like closing costs, etc. on "good faith estimates" won't change massively?
3.) How do I handle rate locking when I am applying for a mortgage > 60 days out from closing?
Is the 7 day thing in yourpurchase agreement?
Yes, our realtor said that is pretty standard (at least in PA) since sellers want to ensure you are serious about being credit-worthy versus being under contract for 60 days and constantly scrambling to find someone to underwrite.
It s not found in my state. But many people are pre-approved before purchasing.
We were pre-approved, but just by a single local bank, but we want to see if we can find a better rate elsewhere rather than just blindly going with them.

From reading more, looks like beyond 60 days we could just "float" the rate and then lock inside 60, so #3 seems to be less of an issue.

ytrewq
Posts: 46
Joined: Wed Jan 22, 2014 10:08 pm

Re: First-timer shopping for mortgage, compressed timeline w/ odd job situation

Post by ytrewq » Mon Jul 30, 2018 1:43 pm

To shop for mortgage you just need to provide credit score range, property location, sale price, down payment, income and asset details. Rate shopping within 60-day period hitting credit report does not ding/reduce credit score. You can start with calling the lenders with lowest 5 interest rates and they can generate detailed quote for you based on all the details. Most lenders stick to good faith estimate unless any new material fact is identified or you change terms of loan (Amount/Duration/Down payment/Escrow for property tax/insurance). Some lenders will allow you to extend 60-day rate lock for a extra sum of money. You can ask about it during initial call.

Dottie57
Posts: 4646
Joined: Thu May 19, 2016 5:43 pm

Re: First-timer shopping for mortgage, compressed timeline w/ odd job situation

Post by Dottie57 » Mon Jul 30, 2018 1:46 pm

wxturtle wrote:
Mon Jul 30, 2018 1:37 pm
Dottie57 wrote:
Mon Jul 30, 2018 1:11 pm
wxturtle wrote:
Mon Jul 30, 2018 12:05 pm
Dottie57 wrote:
Mon Jul 30, 2018 9:31 am
wxturtle wrote:
Sun Jul 29, 2018 4:21 pm
Totally overwhelmed by this whole process.

Just went under contract on a house in PA Friday. We are currently out of state (CA), but moving in a few months. We were preapproved from a local bank a few weeks ago just because our realtor had a good working relationship with them and just wanted a letter we could show to prospective sellers.

According to our realtor, now that we are under contract, we have 7 days to begin the formal approval process with a lender. I assume I have these 7 days to "shop around" for a mortgage.

Further complicating things, we had to negotiate a long closing period (not until mid-October) since we are moving to PA so I can start a new position in mid-January. So we are beyond the standard 60-day lock. Even though my wife/I make decent $$$ currently here in CA, the lender we spoke to re: the pre-approval mentioned we might not get as much weight with our current pay stubs since we'd have to lean on the offer letter for FHA loans (90 day rule?).

Couple other notes. We have excellent (780+) credit and are looking at a 30-year fixed loan (no jumbo). Probably putting 15% down, although it'll be somewhere between ~12% and 20%.

So a few questions for those who may have expertise...

1.) Is this "7 day" thing after going under contract standard? I hadn't really heard about it until we closed.
2.) How the heck do I "shop" for a mortgage? I can see rates for 4-5 banks on like Bankrate, do I just apply for 4-5 loans? Do I call lenders and say "I have great credit, this is how much of a mortgage I need, what can you do?" How do I know that things like closing costs, etc. on "good faith estimates" won't change massively?
3.) How do I handle rate locking when I am applying for a mortgage > 60 days out from closing?
Is the 7 day thing in yourpurchase agreement?
Yes, our realtor said that is pretty standard (at least in PA) since sellers want to ensure you are serious about being credit-worthy versus being under contract for 60 days and constantly scrambling to find someone to underwrite.
It s not found in my state. But many people are pre-approved before purchasing.
We were pre-approved, but just by a single local bank, but we want to see if we can find a better rate elsewhere rather than just blindly going with them.

From reading more, looks like beyond 60 days we could just "float" the rate and then lock inside 60, so #3 seems to be less of an issue.
I would lock asap, and take that loan. If you find a lower rate a couple years down the road, refinance or add a couple hundred each payment to pay off early and pay less interest. I paid off early and avoided paying 1/3 the interest.

mountains
Posts: 27
Joined: Sun Jun 17, 2018 10:06 pm

Re: First-timer shopping for mortgage, compressed timeline w/ odd job situation

Post by mountains » Mon Jul 30, 2018 9:57 pm

Tamarind wrote:
Mon Jul 30, 2018 1:24 pm
I can't help with 1) and 3), but for #2, you probably don't want to apply for multiple loans at once. Each ping will slightly reduce your credit score. Ask for quotes first and compare their standard terms to choose. Then only apply for one.
Thats usually bot a conceen for mortgages. Recent inquiries is only a small part of you credit score. Also, if you have several requests within a couple of days they are usually treated as a single inquiry. I forget the detail but you can Google it.

middistancerunner
Posts: 143
Joined: Tue Aug 19, 2014 12:02 am

Re: First-timer shopping for mortgage, compressed timeline w/ odd job situation

Post by middistancerunner » Mon Jul 30, 2018 11:11 pm

mountains wrote:
Mon Jul 30, 2018 9:57 pm
Tamarind wrote:
Mon Jul 30, 2018 1:24 pm
I can't help with 1) and 3), but for #2, you probably don't want to apply for multiple loans at once. Each ping will slightly reduce your credit score. Ask for quotes first and compare their standard terms to choose. Then only apply for one.
Thats usually bot a conceen for mortgages. Recent inquiries is only a small part of you credit score. Also, if you have several requests within a couple of days they are usually treated as a single inquiry. I forget the detail but you can Google it.
When I was recently applying for a mortgage, two different lenders told me directly that this is a common misperception/myth (the single inquiry/grouping thing.). That said, I got the impression that multiple inquiries would not be seen as a major factor in the lenders model because they anticipate you shop around.

adamthesmythe
Posts: 2291
Joined: Mon Sep 22, 2014 4:47 pm

Re: First-timer shopping for mortgage, compressed timeline w/ odd job situation

Post by adamthesmythe » Mon Jul 30, 2018 11:30 pm

You can call around all you want, but you had better have at least one completed application done before 7 days are up.

Do you lose the security deposit if you don't complete an application? Or do you just lose the house?

I only ever applied for a mortgage at one bank at a time.

getawaydriver
Posts: 1
Joined: Sat Nov 10, 2018 6:35 pm

Re: First-timer shopping for mortgage, compressed timeline w/ odd job situation

Post by getawaydriver » Sat Nov 10, 2018 6:45 pm

How the heck do I "shop" for a mortgage? I can see rates for 4-5 banks on like Bankrate, do I just apply for 4-5 loans? Do I call lenders and say "I have great credit, this is how much of a mortgage I need, what can you do?" How do I know that things like closing costs, etc. on "good faith estimates" won't change massively?

What you see on Bank Rate is just the lowest rates lenders offer to borrowers with perfect credit. To get a quote on what your rates will be, you need to complete a loan application to get a loan estimate from a lender that breaks down lender fees, closing costs, and interest rate. Don't be afraid of having multiple lenders pull your credit, FICO has a rate shopping window of 30 days for mortgages. Meaning any inquiries from mortgage lenders within a day period will only count as a single inquiry.

User avatar
leeks
Posts: 235
Joined: Thu Apr 07, 2011 4:33 pm
Location: new york

Re: First-timer shopping for mortgage, compressed timeline w/ odd job situation

Post by leeks » Sat Nov 10, 2018 8:33 pm

Tamarind wrote:
Mon Jul 30, 2018 1:24 pm
This is not what you asked for but one of your options is to back out of the contract and rent when you initially move there. Then you can make a home purchase with a time frame that works.
+1

You have at least seen the house in person, right? I don't understand why so many people insist on buying a house before they move to another state. It makes so much more sense to rent for the first 6 months to 1 year to find the neighborhood/commute that will be optimal for the long term. Also to ensure you actually like the new job.

Trism
Posts: 248
Joined: Mon Jul 18, 2016 6:34 pm

Re: First-timer shopping for mortgage, compressed timeline w/ odd job situation

Post by Trism » Sun Nov 11, 2018 8:03 am

Several comments:

- Referrals from a real estate agent are generally the worst way to "shop" for a mortgage, because you aren't really shopping, you're surrendering to someone else's priority (the agent wants an easy closing) in exchange for your own convenience. Convenience lasts a few weeks, but the payments go on for 15-30 years;

- If you can put 15% down for FHA (and pay PMI), buy less house and put 20% down and go conventional. PMI is flushing money down the toilet for taking on a statistically risky loan (you won't default, but many others will - and you're subsidizing the cost of the recklessness of others);

- Get some custom quotes from Zillow Mortgage Rates (or Bankrate) and make some calls. You don't have to have multiple simultaneous applications to get enough info to compare your options. Make some calls based on the best quotes you receive online, and spend an hour or two on the phone. You'll likely save many thousands of dollars over the life of your mortgage;

- You should be able to get pre-approved (which is different from pre-qualified) from any reputable mortgage company in 7 days (usually this is just an application and submission of documents that are readily accessible);

- There are a lot of misconceptions about inquiries and their impact on your FICO scores. Here is an explanation directly from the source: https://www.myfico.com/credit-education ... -inquiries ;

- I generally advise having backup financing on a purchase, since your closing date is contractual. This DOES mean having two applications/loan files with two different mortgage companies. Many will disagree with me on the necessity of this, but on our last purchase we had to invoke Plan B about halfway into the process due to the incompetence of our Plan A mortgage company.

Post Reply