Preapproval for mortgage

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Oh123
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Joined: Sat May 27, 2017 3:47 pm

Preapproval for mortgage

Post by Oh123 »

We are getting ready to buy a house in a good school district if we find the right house for the right price, but also are willing to wait up to 2 years if we don't find anything. Our daughter will start school in 2022 and we are living comfortably in the current house.
We do not have a preapproval for a mortgage yet, but pretty sure that we will qualify for one as we have excellent credit history and solid income. From what I read, these approvals are valid up to 90 days and need to renew after that. I was thinking to apply for preapproval only after we find a house, but not sure if we can get it on time if we have to submit an offer quickly. If we apply for it in advance, we will have to keep it renewing until we find a house and I assume that it would affect the credit score. Any suggestions on this situation? Thanks
portfolio123
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Joined: Mon Jul 13, 2020 9:36 pm

Re: Preapproval for mortgage

Post by portfolio123 »

Good to get a pre-approval before you start the process of looking at homes. Helps considerably when making offers in a competitive market and sellers want to see this documentation before verbally accepting or negotiating. If you don’t have, it could take a few days to get and you may miss our.

Mine expired but was able to have them draft a new one within 24 hours (not sure if this is standard across all banks but imagine it’s pretty quick - after all, they want to lend to you).
mogg
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Re: Preapproval for mortgage

Post by mogg »

If pre-approval goes through underwriting, then expect to take 2 weeks to get pre-approval. Therefore, get pre-approval now, and renew. Loan officers will often renew without going through underwriting again.
60B4E24B
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Re: Preapproval for mortgage

Post by 60B4E24B »

mogg wrote: Mon Sep 28, 2020 12:27 am If pre-approval goes through underwriting, then expect to take 2 weeks to get pre-approval. Therefore, get pre-approval now, and renew. Loan officers will often renew without going through underwriting again.
I that's a pre-qualification. They let you close slightly faster in theory since you already been through underwriting. Pre-approvals take a couple of hours to get in my experience.
Lee_WSP
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Location: Arizona

Re: Preapproval for mortgage

Post by Lee_WSP »

It's better to have it and not need it than to need it and miss out because you couldn't get it in time.
WS1
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Re: Preapproval for mortgage

Post by WS1 »

Push your lender for a specific answer on what they are giving you.

I (wrongly) thought
Pre-qual was based on stated income, stated assets, and a credit check
Pre-approval was full underwriting without a specific property

Turns out (all without specific property)
Credit union: stated income, stated assets, hard pull = pre- approval
Better.com: stated income, stated assets, soft pull = pre approval
Direct Lender #2: stated income, stated assets, hard pull = pre approval
Direct Lender #2: pay stubs, tax returns, w2, bank statements, hard pull, full underwriting = some clever name with a commitment letter
EightBall
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Re: Preapproval for mortgage

Post by EightBall »

I used better.com for my preapproval. Quick and easy. You give them your income and assets (based on your statements, no docs required yet). Then they run your credit (soft pull) and give you a preapproval. I think it's good for 60 days. To renew, they soft pull your credit again. So just keep renewing until you have an accepted offer.
tj
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Re: Preapproval for mortgage

Post by tj »

WS1 wrote: Mon Sep 28, 2020 3:29 pm Push your lender for a specific answer on what they are giving you.

I (wrongly) thought
Pre-qual was based on stated income, stated assets, and a credit check
Pre-approval was full underwriting without a specific property

Turns out (all without specific property)
Credit union: stated income, stated assets, hard pull = pre- approval
Better.com: stated income, stated assets, soft pull = pre approval
Direct Lender #2: stated income, stated assets, hard pull = pre approval
Direct Lender #2: pay stubs, tax returns, w2, bank statements, hard pull, full underwriting = some clever name with a commitment letter
What can you use for a a "stated income" The number that was on your most recent 1040? an official offer letter?

It would suck to be preapproved and then not be approved after fidning a place....
beachairs
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Re: Preapproval for mortgage

Post by beachairs »

In my HCOL area, a realtor won't help you until you are pre-qual/pre-approved.
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whodidntante
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Re: Preapproval for mortgage

Post by whodidntante »

beachairs wrote: Wed Sep 30, 2020 6:03 pm In my HCOL area, a realtor won't help you until you are pre-qual/pre-approved.
I bet they also know a great lender for you! Where greatness is defined as the lender who pays the largest referral fee.
Mustang8307
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Re: Preapproval for mortgage

Post by Mustang8307 »

EightBall wrote: Mon Sep 28, 2020 9:46 pm I used better.com for my preapproval. Quick and easy. You give them your income and assets (based on your statements, no docs required yet). Then they run your credit (soft pull) and give you a preapproval. I think it's good for 60 days. To renew, they soft pull your credit again. So just keep renewing until you have an accepted offer.
I was just preapproved this week and had the same experience with Better. Very simple.
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whodidntante
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Re: Preapproval for mortgage

Post by whodidntante »

I got a pre-approval once. I do not expect I will do it again, but I guess I learned stuff. Pre-approval does not have any sort of standardized definition, so make sure you understand what you are getting and that you actually need what you are getting. Especially if it is time consuming or costly.

Getting approved for a mortgage is incredibly easy if you are a working stiff with a big, beautiful credit report. If you meet the conforming loan criteria, stable work history, etc., it's virtually guaranteed. There is an entire industry designed around giving a mortgage to anyone who can check the boxes.

I think lenders like pre-approvals because they create loyalty, if feeling slightly trapped is the same as loyalty. And real estate agents like them because it shows you are serious, loyal, and maybe a little gullible.

The better.com pre-approval sounds like a reasonable hobby, as long as you understand that it just means they might give you a mortgage if you check the boxes. Which is exactly the same assurance you have if you apply for a mortgage.
WS1
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Re: Preapproval for mortgage

Post by WS1 »

tj wrote: Wed Sep 30, 2020 2:27 pm
WS1 wrote: Mon Sep 28, 2020 3:29 pm Push your lender for a specific answer on what they are giving you.

I (wrongly) thought
Pre-qual was based on stated income, stated assets, and a credit check
Pre-approval was full underwriting without a specific property

Turns out (all without specific property)
Credit union: stated income, stated assets, hard pull = pre- approval
Better.com: stated income, stated assets, soft pull = pre approval
Direct Lender #2: stated income, stated assets, hard pull = pre approval
Direct Lender #2: pay stubs, tax returns, w2, bank statements, hard pull, full underwriting = some clever name with a commitment letter
What can you use for a a "stated income" The number that was on your most recent 1040? an official offer letter?

It would suck to be preapproved and then not be approved after fidning a place....
Each lender had adjustments to enter for commission/bonus/OT, but that didn’t affect me.
averagelonghorn
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Re: Preapproval for mortgage

Post by averagelonghorn »

whodidntante wrote: Wed Sep 30, 2020 6:28 pm
beachairs wrote: Wed Sep 30, 2020 6:03 pm In my HCOL area, a realtor won't help you until you are pre-qual/pre-approved.
I bet they also know a great lender for you! Where greatness is defined as the lender who pays the largest referral fee.
I'm a Realtor, I do refer a few lenders, and I have never gotten a referral fee, and would never accept one. I am not so hard nosed that I won't help at all before seeing a pre-approval (or proof of funds), but I for sure won't write up an offer without one. Getting pre-approved, or at least pre-qualified is something that I see as minimal effort on a buyer's part so I know they're at least a little bit serious.

My definition of greatness (for a buyer) would be one that follows the rules and closes on time, AND actually keeps the borrower apprised of the progress of their loan application. Lenders that don't close on time put their clients at risk of breaching their purchase contract, where at least earnest money is at risk, possibly more.

My definition if greatness for a refinance is the best rate balanced with low closing costs.

Your point in a subsequent post is absolutely correct; definition of what constitutes a pre-qualification vs a pre-approval are a bit fast and loose.... generally a pre-approval is considered stronger (further along in the underwriting process) but that varies a lot from lender to lender and there isn't really a standard definition.
averagelonghorn
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Re: Preapproval for mortgage

Post by averagelonghorn »

Oh, and at least half of my buyers go with a lender not on my list; I'm fine with that; I ALWAYS tell them to shop around and go with who they're comfortable with.... That's fine, it really is just that virtually no seller in my market would consider an offer NOT accompanied with some sort of pre-approval or pre-qual (or proof of funds if a cash offer.)
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