Author Topic: Possibly stupid mortgage interest rate/pre-approval questions  (Read 2957 times)

rubybeth

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DH and I don't currently use a local bank or credit union. I will number my questions so you can answer one or more.

1) How do we decide which mortgage lender to use?
2) Would SoFi or Quicken/Rocket Mortgage be a good start?
3) How many lenders should we 'shop' for good interest rates?
4) Is there a way to shop actual interest rates vs. quoted ones on websites? Is every time we 'apply' to find out the potential interest rate doing harm to our credit rating(s), or is this a 'soft pull' on our credit?
5) How much of our down payment should we have saved before we get 'pre-approved'? For example, we could theoretically get pre-approved once my DH has an offer of employment (finishing last semester of grad school), and my income alone would be enough to get us pre-approved for the amount we'd want (less than $150,000, 30 year conventional mortgage) plus the savings we have in our emergency fund. But we would continue saving/shopping until we find the right house. Is it better to have the full 20% down payment before getting pre-approved, or is it okay to do this when we have 10%?

Drifterrider

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Re: Possibly stupid mortgage interest rate/pre-approval questions
« Reply #1 on: March 31, 2016, 12:53:18 PM »
DH and I don't currently use a local bank or credit union. I will number my questions so you can answer one or more.

1) How do we decide which mortgage lender to use?   The one who offers you the best deal
2) Would SoFi or Quicken/Rocket Mortgage be a good start?  Sure
3) How many lenders should we 'shop' for good interest rates?All of them.  Do the math to determine who is really offering the best deal
4) Is there a way to shop actual interest rates vs. quoted ones on websites? Is every time we 'apply' to find out the potential interest rate doing harm to our credit rating(s), or is this a 'soft pull' on our credit?
5) How much of our down payment should we have saved before we get 'pre-approved'? For example, we could theoretically get pre-approved once my DH has an offer of employment (finishing last semester of grad school), and my income alone would be enough to get us pre-approved for the amount we'd want (less than $150,000, 30 year conventional mortgage) plus the savings we have in our emergency fund. But we would continue saving/shopping until we find the right house. Is it better to have the full 20% down payment before getting pre-approved, or is it okay to do this when we have 10%?If you plan to put 20% down, wait until you have it.  VA requires no down payment.  FHA requires 3% (I think that is still true)  The more money you have to put down, the better positioned you are to obtain a favorable term.  BTW, Pre-approval means not approved :)  Almost everyone is "pre-approved".

forummm

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Re: Possibly stupid mortgage interest rate/pre-approval questions
« Reply #2 on: March 31, 2016, 02:36:56 PM »
aimloan.com is nice because you can get a quote for their rates without having to apply for a loan. And their rates have always been the best of anywhere I've seen. They were slow to process my refi 4 years ago, but that was in the middle of a huge mortgage crush due to the low interest rates and housing market. And it was a refi so it didn't matter.

Re #4, FICO counts a period of shopping for credit as a single pull. So if you get 5 pulls for credit applications within the a short time period (I forget if it's 30 or 45 days) then they only cumulatively count as one pull. And when someone pulls your credit for a mortgage application, it's a hard pull.

FHA loans are pretty expensive due to the mortgage insurance that you can't get rid of for a long time (or sometimes ever) without refinancing. If you have enough to put down to avoid FHA, you probably should.

iamlindoro

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Re: Possibly stupid mortgage interest rate/pre-approval questions
« Reply #3 on: March 31, 2016, 02:51:03 PM »
Re #4, FICO counts a period of shopping for credit as a single pull. So if you get 5 pulls for credit applications within the a short time period (I forget if it's 30 or 45 days) then they only cumulatively count as one pull. And when someone pulls your credit for a mortgage application, it's a hard pull.

Yup.  Your window varies based on the FICO scoring model used by the person pulling the credit, but you will get either 15 or 45 days to shop around.  Further, the Mortgage FICO scoring models disregard inquiries for the 30 day period before the pull, so that means the minor drop caused by the one "logical" credit pull won't affect your rate either.

rubybeth

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Re: Possibly stupid mortgage interest rate/pre-approval questions
« Reply #4 on: April 01, 2016, 06:35:11 AM »
Thanks, everyone! All of this information is incredibly helpful.

forummm

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Re: Possibly stupid mortgage interest rate/pre-approval questions
« Reply #5 on: April 01, 2016, 08:35:31 AM »
<tip of the top hat>

Another Reader

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Re: Possibly stupid mortgage interest rate/pre-approval questions
« Reply #6 on: April 01, 2016, 12:07:13 PM »
Quicken and its off shoot, Rocket, are not low cost providers and the underwriters are not the best.  I would not bother with a "pre-approval" until you are ready to buy.  The pre-approval is usually for a short period.  Make sure your credit is in order and you have accumulated the down payment.  You will need to document several months of in-flows of money, especially gifts and loans.  If you know your credit score, you can get a quote from AimLoan or other lenders. 

rubybeth

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Re: Possibly stupid mortgage interest rate/pre-approval questions
« Reply #7 on: April 01, 2016, 01:05:44 PM »
Quicken and its off shoot, Rocket, are not low cost providers and the underwriters are not the best.  I would not bother with a "pre-approval" until you are ready to buy.  The pre-approval is usually for a short period.  Make sure your credit is in order and you have accumulated the down payment.  You will need to document several months of in-flows of money, especially gifts and loans.  If you know your credit score, you can get a quote from AimLoan or other lenders.

Good to know, will avoid Quicken/Rocket. They make it seem really easy, so that's the appeal.

Will accumulate the down payment before we apply for a loan. Our credit scores are both good/high, and no debt so no debt-to-income ratio stuff to worry about.

Right now, my husband is a grad student until May but we're hoping he's employed within 6 months of graduation, really hoping it's much sooner than that. It will take a few months to accumulate the rest of the down payment, so hoping that's enough work history for him. If not, I am sure my income would be enough to get us approved for the amount we want to borrow (probably a $150,000 house at most, so loan would be around $130,000 or less).

Thanks for all the advice! Feel free to add more.