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My current living situation might come to an end within the next 12 months. I plan to stay until the bitter end, but would like to have everything ready to go when the time comes. I've already decided it's best to buy a small coop apartment, rather than rent. Is getting preapproved for a mortgage a good idea? Does it lower a credit rating? Do you need to have a property in mind already? I have never done this before and have no clue. My credit rating is excellent, above 800. I will have 20% plus legal/moving expenses if I stay within my budget(225,000). Also my salary is not very high, but I did the numbers and this is less per month than renting. Is there anything as a no income check mortgage these days? I can get a co-signer if necessary, but rather not.
I know this is a lot of info I'm looking for, but any input is appreciated. I'll be doing my own research, but am in the midst of a major family meltdown at the minute.
Thanks!
Unless you are ready to buy within the next 60 days or so you will be pretty much wasting your time getting a pre approval. Even if you get pre approved you can still be denied the real loan approval if you loan officer doesn't do their due diligence. In my experience loan officers tend to move around quite a bit from company to company. The LO you worked with today might not be there tomorrow. Been there and done that. My advice is if you are not really ready to buy right now then don't waste your time. Also something I did when shopping for a home to ensure I would stay within budget was get some info on the home first. I was able to get an insurance quote even before I put an offer in. Sometime the insurance company can give you some insight if repairs have been made. I also tried to inquire about utilities for the realtor. To get a true estimate of what your cost are going to be the LO is going to have to have a general idea of where you are wanting to live. That way they can tell you the cost with taxes and insurance. They will estimate that based on the location. If you do end up trying to get pre approved get a letter with the amount that you are willing to offer on the property and not what you are actually approved for.
Use the "Search This Forum" box in the upper right under the horizontal list of page numbers to find many lengthy posts on this topic.
The reason I make this suggestion is that you will find a bevy of information that would not necessarily show up in this thread organically.
Is getting pre-approved for a mortgage a good idea? Yes, within 60 days of purchase, but it's a good idea to see where you stand before that, too. Does it lower a credit rating? Not really. Do you need to have a property in mind already? No. I have never done this before and have no clue. My credit rating is excellent, above 800. I will have 20% plus legal/moving expenses if I stay within my budget(225,000). Also my salary is not very high, but I did the numbers and this is less per month than renting. You doing the numbers doesn't really count. Your new total house payment inclusive of taxes insurance and HOA, plus all monthly payments as listed on your credit report, must be less than 45% of your gross monthly income. Is there anything as a no income check mortgage these days? Yes, if you are self employed and want to pay 8-12% and 5 points.
Thank you for your replies and information. It's a start. I'm going to get familiar with co-op owning by going to a few open houses next month. As far as expenses vs income, I am debt and payment free. I hope that'll work in my favor.
With the changes we have seen in the past 12 months, about 40-50% that were previously told no, can now purchase. With the changes we saw 36 months ago, we saw a sharp decline in the folks that could get a loan. Point: guidelines constantly changing.
Do talk to someone and have your credit pulled for evaluation. Some minor tweaks to a credit report can adjust a credit score substantially. Example - not having debt can bring down a score. Using your VISA to buy gas and paying 75% each month can bump the score higher. The higher the score, the better the rate.
... I'll be doing my own research, but am in the midst of a major family meltdown at the minute.
Thanks!
If it is a marital "family meltdown," be careful how you take title to a property.
Legal advice is warranted for that specific item, among other things of course.
From I see it, pre-approval is useful for
- Understand what is required in a loan process, so that you're more prepared when applying for the actual loan
- Understand how much loan you are qualified
- When submitting an offer, show the seller that you are financially ready. Some sellers even ask for pre-approval from major banks (they need to have the confidence that if they do accept your offer, the deal will not fall through).
Pre-approval letters are usually effective only for 2 or 3 three months. That means if you'll need to reapply for it if it expires.
Because lenders usually pull your credit report for pre-approval, your credit score will usually drop because of the hard credit pull.
From I see it, pre-approval is useful for
- Understand what is required in a loan process, so that you're more prepared when applying for the actual loan
- Understand how much loan you are qualified
- When submitting an offer, show the seller that you are financially ready. Some sellers even ask for pre-approval from major banks (they need to have the confidence that if they do accept your offer, the deal will not fall through).
Pre-approval letters are usually effective only for 2 or 3 three months. That means if you'll need to reapply for it if it expires.
Because lenders usually pull your credit report for pre-approval, your credit score will usually drop because of the hard credit pull.
If they need to re-pull credit because you take longer than 3 months to find a house, is that re-pull a hard credit pull as well?
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