When to shop for a definte June move? (PMI, loan officer, interest rate)

[jctx]

I am casually browsing home listings and have been out with a real estate agent (more or less to see the area). I dont want to waste her time, but we are going back to see the area again to be sure its a fit.

She has emailed and mailed us listings to browse, and has encouraged us to contact the lending agency to get an idea of what we can afford etc. I just thought it was too soon, if we're moving in somewhere in June.

Since we've never purchased a home before, I dont know when to look seriously. Is now too soon? We cant afford a mortgage now because we are relocating for a job after 12 years of education, and the income is about to explode (in a good way ). The prospective employers are saying that they are prepared to supply the appropriate letters to guarantee the future income, etc.

The new area does not have appropriate renting options, so timing has to be right.

[jctx]

I forgot to mention that others have told us that we can set the closing date, yet I feel that if we found something we really wanted, maybe June as a closing date is simply too far. We have a definite "move-no-later-than date" of June 15th.

[teebopop]

I'll be watching for someone to answer your question because I have pretty much the same problem ... my move is set for end of April.

[ShanetheMortgageMan]

Well you definitely want to contact a loan officer sooner than later to make sure your situation has been fully evaulated. It never hurts to contact one really early in the process, 9+ months before you want to buy, because then if there are some items to be aware of you'll have them in mind, not jeopardizing your chances of getting approved for a mortgage when you are ready to buy.

You know the saying, those who fail to plan, plan to fail? That happens a lot with homeowners buying a home, they get close to buying their home and then finally try and put the financing together - just to find out there are 1 or 2 items that prevents them from qualifying that if they had the time to take care of them before, they would've been able to buy.

It took my wife and I over 4 months to find the home that we eventually wanted to buy, we pretty much canvassed every neighborhood here in South OC. Not sure what type of buyer you are, but some people like us just take awhile to find a home - some people I help find their home in a weekend or two.

Now you are right, putting an offer in today for a closing in June isn't realistic, and frankly I don't know of a seller who would accept such an offer. So making an offer soon probably isn't going to happen, but taking care of getting pre-approved should be done early in the process to avoid that pitfall later on.

[jctx]

What sort of "1 or 2 items" that might prevent a qualification could be taken care of before hand, for example?

Also, what exactly is a Rapid Rescore, and is this something that occurs now?

One more thing...how long is a pre-approval good for and is it too soon to do this now? Thanks so much for responding.

[ShanetheMortgageMan]

The list of "1 or 2 items" is actually about 1,000 long.. so to give you a couple examples, your employment might not qualify because you just switched to being paid via 1099'd instead of W-2'd are would now be considered self-employed, the reserves you have to qualify with are a part of a pension which doesn't allow you to withdraw or take a loan out against it until you are either terminated, retire, or die, you are a foreign national and not a citizen, perm. alient, or non-perm. alien. The list goes on and on. Most of the time there aren't any problems, but do you want to be caught in the rare situation where there is? Not when you are talking about moving and taking on the largest debt in your life.

A rapid rescore is where information on your credit report is rapidly updated with the credit bureaus. This is done by working with a loan officer whose credit vendor has rapid rescoring capabilities. Sometimes the official name might be different, but all loan officers should know it by it's general name of rapid rescoring. The process is this: you notice that there is something wrong on your credit report, such as a charge-off or collection account which isn't yours, or you are going to change something, such as reduce the balance on several credit cards. You would need to have the action happen (creditor acknowledge that charge-off isn't yours, paying down credit card balances, etc.), receive a letter from the creditor stating what happened (collection is not jctx's, credit card balance is now $0, etc.), and provide that to your loan officer. Your loan officer would then fax it over to their credit vendor, and typically within 3-5 business days your credit report will reflect the change... vs the standard 30 days. This can be helpful if you only have a short amount of time before your credit score needs to be at a certain point. Now it comes at a cost though, usually $30 per trade line per bureau per borrower - so if the collection is on you and your wife's credit, on all 3 credit bureaus, that would be $180 to get it removed from everything via a rapid rescore.

A pre-approval expires when the documentation in the file expires. The documentation to keep a file going are: paycheck stubs, asset statements & credit report. Paycheck stubs & asset statements expire every 30 days and credit reports are good for 120 days (on an existing home) or 180 days (on a new construction home). So at closing, the most current documentation in the file must be within those timeframes. Since income & assets you have relatively full control of, you really just want to pay special attention to your credit to make sure nothing pops up, etc. A credit monitoring service, such as at TrueCredit.com or myFICO.com, would be a good idea to look into leading up to you buying a home.

[jctx]

Wow, Shane, what an awesome post! Very helpful information, written perfectly. Thanks.

[DubbleT]

Originally Posted by ShanetheMortgageMan

A rapid rescore is where information on your credit report is rapidly updated with the credit bureaus. This is done by working with a loan officer whose credit vendor has rapid rescoring capabilities. Sometimes the official name might be different, but all loan officers should know it by it's general name of rapid rescoring. The process is this: you notice that there is something wrong on your credit report, such as a charge-off or collection account which isn't yours, or you are going to change something, such as reduce the balance on several credit cards. You would need to have the action happen (creditor acknowledge that charge-off isn't yours, paying down credit card balances, etc.), receive a letter from the creditor stating what happened (collection is not jctx's, credit card balance is now $0, etc.), and provide that to your loan officer. Your loan officer would then fax it over to their credit vendor, and typically within 3-5 business days your credit report will reflect the change... vs the standard 30 days. This can be helpful if you only have a short amount of time before your credit score needs to be at a certain point. Now it comes at a cost though, usually $30 per trade line per bureau per borrower - so if the collection is on you and your wife's credit, on all 3 credit bureaus, that would be $180 to get it removed from everything via a rapid rescore.

Is this a common process in all parts of the country? I just faxed a letter to my loan officer from a creditor verifying that my name (as an authorized user only) was removed from a delinquent account over three months ago, even though none of the big three credit companies reflect this on my credit reports. The loan officer stated that the info was helpful as far as getting my loan approved, but she also specifially said it would not boost my credit score. I am supposed to close in two weeks, now wondering if I should ask my loan officer about this? If my loan officer is clueless or unwilling to work with me would you have any recommendations?

To the OP, yes, start early on the financing. As you can see I have been working for three months to take care of one stupid problem. The credit card company has been less than co-operative and it took a letter from my loan officer to even get a direct response from them! I'm looking at a higher interest rate as a result.

[teebopop]

Husband's credit rating is averaged 830 (of the top three cr. rep. agencies). Mine is 794 (same average). Husband is now debt free (it took 2 years of sacrificing and hard work, but he did it ... it probably didn't hurt that I was standing behind him with a whip and a chair, hmmmm?). My debt is $3,500 ... monthly payments are $200 month (way over the minimum). $2,000 of that was buying our college kid a new laptop for Christmas.

We're going VA. Hey, we paid off our debt so we could get our credit scores up and be debt free ... we're not MADE of money to do both save and pay off debt. So we have no down payment.

We DID save enough for closing costs (as long as it doesn't go over $4,000), moving down south to NC, and buy a new king-sized mattress set.

We're not looking to spend more than $160,000. Our NET income (we're retired so it's coming from pensions and VA disability) per month is $5,011.

Finally, husband is 100% service-connected disabled Vet. That will help with property taxes in NC and some of the closing costs (PMI is waived, so is funding fee?).

So, I've done my homework. We've worked hard for the last couple of years to get to this point.

How do you think we'll do? (Oh, and the whip and chair is hidden back in the closet just in case hubby gets out of control again. Shredding all the credit cards helped too.)

[ShanetheMortgageMan]

jctx, you are welcome.

Originally Posted by DubbleT

Is this a common process in all parts of the country? I just faxed a letter to my loan officer from a creditor verifying that my name (as an authorized user only) was removed from a delinquent account over three months ago, even though none of the big three credit companies reflect this on my credit reports. The loan officer stated that the info was helpful as far as getting my loan approved, but she also specifially said it would not boost my credit score. I am supposed to close in two weeks, now wondering if I should ask my loan officer about this? If my loan officer is clueless or unwilling to work with me would you have any recommendations?

Most credit vendors have this feature, but not all of them, including two very widely used ones... so I imagine there are quite a few companies out there who do not have the ability to do a rapid rescore.

What are your scores now and what type of financing (FHA or conventional) are you qualifying for? A new score can be used to get better terms late in the process, but if your score is already the best for the type of financing you are doing it might be fruitless to do a rapid rescore. Conventional either needs at least a middle score of 720 or 740 (depending on the LTV) for the best rates, FHA needs at least a 620.