Your Questions About Home Loan Pre-approval

Sharon asks…

Will it hurt my credit on my preapproved home mortgage if I apply for a consolidation for my credit cards?

I have been pre-approved for a home loan. I have not found a house yet. I want to consolidate my credit card and personal loans into one loan. I didn’t want to exonerate my home loan approval.

John answers:

This depends on a number of factors. First your pre-approval was determined on the state of your credit report at this time. You approval depends on your debt/income ratio and your credit history. It takes into account how many cards you currently have an obligation to repay. Often creditors like to see you having cards and how well you handle them, but too many obligations could scare them off. If you are simple consolidating into one loan, without adding to your overall debt to income ratio, then I see no reason this should harm you. If you are considering taking out more credit, then it would hurt you.

However, if you could wait until escrowww closes, I think this would be a safer option. Usually it takes 30 days to close escro on a home purchase. I would get out there and find the house I wanted and close escro, then consolidate cards and other debt into one loan. I think it would also be easier to do so when you have purchased a home. It is always in your best interest credit wise to own rather than rent. When you own you are creating more assets in the form of equity. Lenders like to see your overall financial state and building equity is rather like money in the bank.

I suggest you seek out a financial adviser, pay the fee for a professional opinion and not rely on what is written here.

I wish you all the best life has to offer.

Susan asks…

Can you get approved for a home without founding a home?

I turn in all my information to the loan officer but she stated the underwriter want to see it before getting approved. So will the underwriter give a pre approval or will I be approved.

John answers:

It happens all the time. This doesn’t mean you will get pre-approved (depends on your credit and such) but the fact that you haven’t found a home yet will not affect your pre-approval,

Sandy asks…

After pre approval for a mortgage what other paper work will they ask for?

I have already submitted 2 yrs w2, 2 mos paycheck stubs, 2 mos check and saving statements. My credit was checked and it was sent to the underwriters for pre approval. But else might they need? I want to be proactive and start collecting everything now; I am trying for an FHA loan and do have the 3.5% down payment. I don’t want any suprises either

John answers:

Here is going to be a list of items:

1. Copies of Driver’s License and Social Security Cards
2. You will have to sign 4506-T’s (IRS transcript)
3. If you have an funds that are being gifted:
a. Signed gift letter
b. Proof of source of funds
c. Bank statements of gifter
4. They will probabally request a new set of bank statements about 1 week before closing.
5. There will be a set of forms needing to be signed: 1003(Mortgage Application),GFE, TIL
6. Signed sales contract
7. All information on your hazard insurance – get from your agent
8. If there is already a survey on the property, it will save you about $400.
9. You may to inquire if anyone else has already done an appraisal on the property if it was appraised by an FHA appraiser. The FHA will assign a number to the property and that specific appraisal. If one has already been completed and follows all rules of HVCC, you may get out of paying for an appraisal – because it was already done.
10. Are you self-employed – they will require additional paperwork relating to your company and length of time relating to.
11. Approx. 5 days before close, they will do a verbal verification of employment.
12. The title company will provide all title work to the closing dept so that a prelim HUD-1 can be issued, your loan officer may provide you with this 1 day before closing, it will also (should) tell you what you need to bring to closing in the form of a cashier’s check made out to the Title Co.

Underwriting can have some strange request, they are not picking on you, it just feels that way. I’ve had to ask for a letter of explanation of why a man got a raise – yeah, making more income.
Just go with it, it may seem strange but you will get your home.

Ruth asks…

If you are buying a home is there a standard amount that first time buyers can get?

We are looking to purchase a home and to lenders gave us the same amount. This was off of a pre approval and not even with the information of income.

John answers:

As a seasoned loan agent, I can tell you that the first thing that an agent should do is a pre-qualification and yes that means checking credit and looking at your income to determine exactly what you are able to borrower versus your debt/income. Only then you will know what you are able to handle even as a first time buyer

Lizzie asks…

Is it OK to apply to more than one lender for a mortgage so I can accept the best offer?

I am a first time home buyer and would like to shop around for the best deals/rates. I’d like to get pre-approved for a loan. I’d also like to shop around for the best terms, interest rates, etc. I’d also like to make sure I am pre-approved for the right amount (for the house that I want and can afford). Is it a good idea to apply for pre-approval to more than one lender so I can pick the best offer? I know it might be negative for a lender to see my credit report be pulled from different lenders. Would they see that as someone looking for the best loan or as someone looking to over extend their credit? Would they be able to tell the credit checks were pulled for a mortgage application? I’ll probably have more questions, but I guess I should wait for the answer to this one before jumping the gun. Thanks in advance.

John answers:

Don’t let anyone pull your credit report until you have made your choice. You can get your score yourself then let the lender know the number. You can call around yourself and then compare rates on the same type of loan. Go for a simple straight forward loan. No variable rate, balloon payments, PMI etc. Talk to as many lenders as possible and write down everything each one says in a notebook. I have found e-trade to be very forthcoming and direct with good rates. Major banks can have decent loans too. Beware of companies who advertise on the radio. Trust no one until you do your research. Find out what the loan will cost as if you were going to write them a check for all the fees instead of letting them roll it into the loan. You’ll be very surprised at how many don’t want to answer that one. Also make sure there is no prepayment penalty. Some of the big advertisers on the radio charge enormous prepayment fees (if you need to sell or refinance) and are very sneaky about this. It is very easy to get financed. Make sure you can easily afford the payment. Most lenders will tell you you can afford a payment much higher than what you actually can while still eating. Good luck- arm yourself with knowledge and you’ll do just fine!

You do not want to apply for many loans!!! By getting your own score you can use this info to shop your loan around. Sometimes realtors choose lenders because the lenders bring donuts to their offices. Call every mortgage company you can on your own. When you have narrowed it down then ask around. Find out who other people you know have their loans through and why they chose them. Also by getting your credit report yourself you have time to check for and fix any errors that might be on your report.

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