First Time Homebuyer Process - HELP!

[lil_miss_frugal]

Hello good folks! Long story short, hubby and I are in the process of buying our first home. We're in the early stages and are hunting for the best lender. Problem is, we really don't know much about the "finding the best bank with the best interest rate" process. What we're wanting to do is compare quotes from a few places. Thing is, they keep telling us they need to pull our credit just for a quote. This worries me since I fear having our score go down due to an inquiry. A lender told me yesterday, "oh don't worry, if different lenders are pulling your credit score all within 30 days, the credit bureau only counts it as 1 hit."  Now if this is true great, but I have no idea. Can anyone confirm this? Should we be letting a few lenders pull our score for a rate quote? Any advice would be appreciated!

[lil_miss_frugal]

That was our experience. Only one credit hit despite many mortgage lenders looking at us. Also the lender we ended up working with matched the lowest interest rate we got from other people which was great because we liked them the best. They were super patient with the 2 of us buying a house for the first time and not having a realtor to walk us through the process.

Awesome, good to know! Thanks

[Trying2bFrugal]

We also started looking for the home, but not sure if we would find home we wanted within 1-90 days.

Bofa is the bank i have my account last 10 years, do they still pull hard enquiry? is there a way to get the estimate of how much I can get pre-approve without applying for it?
I have a appointment on this Saturday with Mortgage specialist in Bofa. I know Bofa is not the preferred bank in many people dictionary, but thats where my savings are (also I have a DCU, wife has a DFCU credit union accounts).

So how do you guys hunt for multiple lenders?

I am very new to housing and we arent even sure if we want to buy old house, renovate ourselve or buy a house with ready to movein.

[Better Change]

I have to say, finding the best mortgage lender was the EASIEST part of buying/owning a home.  Seriously.  I think we got quotes from five companies, and yes, we took a momentary, small hit to our credit scores, but it was all a wash by the time we signed the mortgage papers.  We looked at a few large national banks, but we actually got the best rate and no additional points with a local lender (who eventually sold our mortgage to a national bank, but that's what they do).

I highly encourage you to get pre-qualified and have your lender decision narrowed down before you start shopping.  When you do fall in love with a house, you will be in the best possible financial position to make an offer if you're pre-qualified and have it all figured out already.

And if you're struggling with all the options at this stage, maybe re-think how much you want to buy a house right now.  'Cause it only gets worse! :-P

[lil_miss_frugal]

I have to say, finding the best mortgage lender was the EASIEST part of buying/owning a home.  Seriously.  I think we got quotes from five companies, and yes, we took a momentary, small hit to our credit scores, but it was all a wash by the time we signed the mortgage papers.  We looked at a few large national banks, but we actually got the best rate and no additional points with a local lender (who eventually sold our mortgage to a national bank, but that's what they do).

I highly encourage you to get pre-qualified and have your lender decision narrowed down before you start shopping.  When you do fall in love with a house, you will be in the best possible financial position to make an offer if you're pre-qualified and have it all figured out already.

And if you're struggling with all the options at this stage, maybe re-think how much you want to buy a house right now.  'Cause it only gets worse! :-P

Haha Thanks! The struggle only comes from not knowing! I'm just being defensive right now thinking any little inquiry may hurt our credit score. We'll definitely get pre qualified before we begin our search. From that point on hopefully everything will be smooth :)

[Mr.GrowingMustache]

I highly encourage you to get pre-qualified and have your lender decision narrowed down before you start shopping.  When you do fall in love with a house, you will be in the best possible financial position to make an offer if you're pre-qualified and have it all figured out already.

I am curious too.

So what's the pre-qualification process. I was under the impression I do not need a credit report pull.

Not a first time home buyer myself but I am looking into getting another home. We are going to take our time looking at places, but we did talk to one lender and he wanted to pull our report. Say we end up buying a house 6mo/1 yr later I have to go trough that all over again, getting hits, shopping around, etc.

Should I do the research now? Do I get a pre-approval letter?

[Better Change]

My apologies - I was using "pre-qualification" and "pre-approval" interchangeably.  Apparently they are not the same thing.  You're going to get "pre-approved" for a mortgage, and that approval absolutely requires a credit check (no bank is seriously going to consider loaning you money without it!).  You'll get a letter saying that you've been pre-approved for a certain amount - that's exactly what sellers are looking for when you go to purchase a home.  If you're in a hot market, I really think you should consider getting a pre-approval done.

But if you aren't looking to buy for up to a year or more, and it's a buyers' market where you are, I guess I wouldn't sweat the pre-approval too much.  We chose to do it, and lo and behold, we won the bidding war partly because of it.  All of this is based on my experience, so I don't claim to be an expert here.  You can get the current rates on any website, and you can ask real estate agents in your area about solid local lenders.

(we just sold our house in yet another bidding war.  the winners?  the ones with the highest offer AND the best financing....)

[lil_miss_frugal]

My apologies - I was using "pre-qualification" and "pre-approval" interchangeably.  Apparently they are not the same thing.  You're going to get "pre-approved" for a mortgage, and that approval absolutely requires a credit check (no bank is seriously going to consider loaning you money without it!).  You'll get a letter saying that you've been pre-approved for a certain amount - that's exactly what sellers are looking for when you go to purchase a home.  If you're in a hot market, I really think you should consider getting a pre-approval done.

But if you aren't looking to buy for up to a year or more, and it's a buyers' market where you are, I guess I wouldn't sweat the pre-approval too much.  We chose to do it, and lo and behold, we won the bidding war partly because of it.  All of this is based on my experience, so I don't claim to be an expert here.  You can get the current rates on any website, and you can ask real estate agents in your area about solid local lenders.

(we just sold our house in yet another bidding war.  the winners?  the ones with the highest offer AND the best financing....)

So what all does the quote have? Is it just the rate you'd qualify for? Or do you get other info in the quote as well?

[Calvawt]

Yes, its only 1 hit, not a big affect on your credit score.

If you have a credit union or access to one, they can definitely be a good resource for a low rate.  I myself have used AimLoan to get a really low rate, but you have to keep on them and really look at the fees.

[Trying2bFrugal]

1) If I want to know how much mortgage I will be eligible, will a lender be able to tell without putting hard inquiry on my credit? The bank have my account details and they do have the score shown in their site when I open my account history.
2) If you plan to go to auctions, will pre-approval necessary and do you need to carry check from bank?

[Bracken_Joy]

Bought a couple years ago. Our experience: yes, only one hit. Our credit union ended up being the best rate. Pre-approval was a good move. We got pre-approved the week before our house hunt, spend 2 intensive days searching, put in an offer that weekend, and closed 30 days later. It moved VERY fast, and I was really glad I had done a ton of research ahead of time- because even with all the knowledge, I STILL ran into stuff that was new to me.

[Mr.GrowingMustache]

@Better Change thanks for the insight!!!

Thanks for the follow ups everyone.


From my understanding a pre-approval would require a hard hit? And I will get some sort of a commitment letter form the bank?

How about pre qualification? They wanted to do a credit pull on that too for me. Do you usually get any letter or something that you’ve pre-qualified.

[Trying2bFrugal]

1) If I want to know how much mortgage I will be eligible, will a lender be able to tell without putting hard inquiry on my credit? The bank have my account details and they do have the score shown in their site when I open my account history.
2) If you plan to go to auctions, will pre-approval necessary and do you need to carry check from bank?

I went to Bofa to get these answers. What I found after 20 mins discussion, (I know a lot of you dont need this, but writing for the people like me who got absolutely no idea on house loans)
     
     
     
 

Rule of thumb: $700/$100,000, 45%

• If you are buying house for $300000, then your mortgage would be around $2100 + PMI if you do not put 20% down.
   
• The max you can go/bank suggest/approve is 45% of your gross monthly (after any monthly payment to debts).
                Ie., if you earn 6000/mo, and having car/cc/loan payment of $1000, then 6000-1000=5000 45%=$2250. So you can go for a house worth $300,000.
         
• if you chose different payment terms, then there may be +-$50,000 on house price.
         
• If your credit score is above 720, it is considered as good score for better rates
         
• If you are planning to go for auctions/foreclosures, bofa doesnt (many lenders) provide loan for repairs
         
• If you want to keep down payment low, ARM is an option but it has its own disadvantage (if rates gone up during reassessment)
         
• It will be a hard pull, when you apply for pre-approval.
         
• The pre-approvals can be extended for 120 days, but it doesnt guaranty the rate as its based on your credit score at the time of fund release. So better run with multiple lenders if you are serious about buying.
         
• In my case I am not serious about buying house due to various other factors in my time now.
  

[CashNoCharge]

Items of note for DFCU (assuming Dearborn Financial Credit Union in MI):  They never ever sell your loan.  Ever.   They also have a cash back dividend yearly for the balances in your accounts AND the balances on your loans - the past 15+ years it has equaled roughly 1 month PI payment of the mortgage amount - this is basically just due to the mortgage balance as our main money is in another CU.  Their rates are competitive (show them your best offer - they will most likely meet it or beat it) plus that cash back dividend is "free money" and really adds up when you have a mortgage with them.  Just because you are pre-approved or pre-qualified somewhere else, doesn't mean you have to stick with the lender that gives you the letter to offer on a home with.  I work in the mortgage industry and would totally go with DFCU again for a mortgage just due to the cash-back & servicing of the loan.   If the rate is the same everywhere, why wouldn't you take their ~$1,500/yr?
PS - I do not have any affiliation with DFCU - just them being my mortgage lender.

[Trying2bFrugal]

Items of note for DFCU (assuming Dearborn Financial Credit Union in MI):  They never ever sell your loan.  Ever.   They also have a cash back dividend yearly for the balances in your accounts AND the balances on your loans - the past 15+ years it has equaled roughly 1 month PI payment of the mortgage amount - this is basically just due to the mortgage balance as our main money is in another CU.  Their rates are competitive (show them your best offer - they will most likely meet it or beat it) plus that cash back dividend is "free money" and really adds up when you have a mortgage with them.  Just because you are pre-approved or pre-qualified somewhere else, doesn't mean you have to stick with the lender that gives you the letter to offer on a home with.  I work in the mortgage industry and would totally go with DFCU again for a mortgage just due to the cash-back & servicing of the loan.   If the rate is the same everywhere, why wouldn't you take their ~$1,500/yr?
PS - I do not have any affiliation with DFCU - just them being my mortgage lender.

Thanks!!
I opened a savings account on DFCU, Novi for my wife but didnt knew their name is Dearborn FCU (now that i read your comment and looked on their site, i know :).
I have an account with DCU (Digital Credit Union) from MA which gives fantastic Auto loan (me and many other friends of mine got auto loan for used car/new the lowest was 1.25% if you have a checking account funded and if the vehicle is an efficient car). For same car loan DFCU asked for 2.75% with 0.5% cashback = 2.25% (where many of my friends here get auto loans).

If I would need to buy housing loan, I will totally go with credit union. I just needed to gather information and bofa is like next door to me. Thats the only reason I stepped in.
They are pita and bs when it comes to loans. Credit union goes all the way.