Pre-Approval for first time home buyer?

[azepp]

Bought last year - the pre-approval was easy, our realtor just called her broker and they ran our credit scores, we told them our annual income, and we were done. No documents or anything. Then once we made the offer and had to actually get the financing in place we had to provide bank statements, W-2s, etc.

As others mentioned, be very careful if someone else is giving you money toward a down payment - the banks are frowning upon that big time right now. They want to see that you are the reason for your bank account balance - not your parents.

 

[JY07]

Sorry, I get frustrated at times, because people need to take better care of their finances, make more and save more.I am affliated with a downtown DSM community credit union that pays 4% in a checking account, but offers 3.99% auto loans. No joke.

At least 15 signature-based Debit card transactions must be posted to the account within a one calendar month period to qualify for rewards. ATM and PIN-generated transactions do not qualify member for bonus rate. Available to Personal Accounts only. No monthly service charge.

that sounds like a huge pain in the ***... i'd rather have no atm-fees than need to make a purchase every other day in order to qualify for an extra 2-3% interest

 

[twistedredbird]

Some helpful tips:
1. try to pay down any credit cards to less than %50 of the limit. Even just one or two down helps a lot, and it is one of the fastest ways your credit score will update.
2. hold cash in your checking/savings as long as possible to up your average balances.
3. have pre-approval in hand before you get a realtor. Your bank/lender will be with you longer than them, so shop around.
4. Personally, I would suggest Century 21 mortgage, they are actually one of the biggest/stablest lenders out there, and I have had no issues with them on 2 loans, and they don't sell loans.
5. As others said any cash/down payment etc., try to get in your name somehow.
6. Some lenders will run a "clean your credit software" to see how best you can improve your credit score. Century 21 did this for us, and we spent a few 100 on a couple credit cards, and our interest went down 1/2%.
7. Ask you lender what % of loans they have sold to other lenders. You do not want to go with a bank that does this too much, as many people have gotten their mortgages/property taxes/insurance messed up in those transitions.

 

[JRCampy]

Bought last year - the pre-approval was easy, our realtor just called her broker and they ran our credit scores, we told them our annual income, and we were done. No documents or anything. Then once we made the offer and had to actually get the financing in place we had to provide bank statements, W-2s, etc.

This is the difference between a "pre-approval" and being "pre-qualified". Sellers are more likely to offer consessions on price if they know the buyer already has a mortgage lined up (less things that can happen down the line). A "pre-approval" is not a comitment from the bank, it's mearly a piece of paper saying what the bank MAY lend you if everything you've told them is verified to be accurate.

 

[JY07]

please, its easy... head to wells fargo... not that complicated at all.

I would avoid wells fargo like the plague...

1st experience: when i went house shopping last fall, they were the first place I went for a pre-approval. There was something wrong with my credit report, so they had to take it to their underwriters. After waiting a week and hearing nothing, I went to some of the local banks, who pre-approved me instantly. i didn't hear back from wells fargo until a full month later

2nd experience: once I finally found a house, my realtor recommended i give wells fargo another chance with someone he recommended. So I went to her, gave her everything needed, and we were set to go once i had an accepted offer. Once I got to that point, I emailed the 3 banks i had been contacting asking for their good faith estimates. Two of the banks emailed me within a few hours, wells fargo didn't respond until 3 days later (where I got a call from her, upset, asking why i didn't go through them..)

 

[azepp]

This is the difference between a "pre-approval" and being "pre-qualified". Sellers are more likely to offer consessions on price if they know the buyer already has a mortgage lined up (less things that can happen down the line). A "pre-approval" is not a comitment from the bank, it's mearly a piece of paper saying what the bank MAY lend you if everything you've told them is verified to be accurate.

Thanks for clarifying, and I agree. In our case we were buying from a relo company so this wasn't much of an issue.

 

[DaddyMac]

I would avoid wells fargo like the plague...

1st experience: when i went house shopping last fall, they were the first place I went for a pre-approval. There was something wrong with my credit report, so they had to take it to their underwriters. After waiting a week and hearing nothing, I went to some of the local banks, who pre-approved me instantly. i didn't hear back from wells fargo until a full month later

2nd experience: once I finally found a house, my realtor recommended i give wells fargo another chance with someone he recommended. So I went to her, gave her everything needed, and we were set to go once i had an accepted offer. Once I got to that point, I emailed the 3 banks i had been contacting asking for their good faith estimates. Two of the banks emailed me within a few hours, wells fargo didn't respond until 3 days later (where I got a call from her, upset, asking why i didn't go through them..)

Funny part about all that is that at some point, those banks will likely be selling that loan to Wells Fargo anyway.

 

[CyPride]

I was curious if anyone has had any recent experience with this process? Like where did they go and how the experience was.

I am looking at starting the process soon and any tips or pointers would be great.

shop around.

I'd hit a national bank like a WF
I'd hit a local bank/credit union
And then you may hit a broker.

If you go to a broker that a realtor refers you to, that is fine, but I wouldn't do that. Ask the realtor for their referral fee if you do want to or if the realtor insists.

 

[cyclonejk]

First, go into your bank and make sure they offer a first time homebuyers option. Not all banks are setup with this program. If yes, well then get an application to apply for pre approval purposes. You dont have to have a house picked out. Just kind of a broad price range of what you wish to spend on a house. You then will fill out the application (its pretty lengthy). I would also have copies of your 08 & 09 Tax Returns along with the W-2(Very important) and also a months worth of your most recent pay stubs. If you have bank accounts and 401k stuff you will need the most recent statement on those as well. Anything you put on the applicaiton make sure you can verify that it exists and has similar balances you put on there.

The lender should then be able to do his calculating to see if you could afford this house. THey usually want your monthly house payment to be less than 31% or your total gross income and they want your total monthly term payments to be less than 41% of your gross income. They will pull credit and make sure you dont have any outstanding judgemnts, collections, etc. Most 2ndary market lenders require credit scores of 620 or higher. Just depends on the 2ndary market servicer and there guidelines.

They will also ask you if you would like your closing fees financed or not? Average closing fees on a $150,000 are around $4000-$5000. They will ask about any downpayments or not. If you are abov 80% Loan to Value, they will require you to have mortgage insurance or a guarantee. USDA or Rural Development offers 100% financing upto the purchase price or appraised value of the home. For young couples, thats usually the requested one but that program is only offered in communities where the population is under 25,000 people. Otherwise its FHA insurance and that requires a 3.5% downpayment on the house.

Hope this was somewhat helpful.

 

[JRCampy]

Otherwise its FHA insurance and that requires a 3.5% downpayment on the house.

FHA is not insurance, it is a type of loan that the government offers. Also PMI (premium mortgage insurance) is not strictly limited to FHA loans, although if you're taking an FHA loan more than likely you'll be paying PMI as these type of loans are usually taken out by people who don't have a large down payment. My wife and I used a conventional loan, but still are paying PMI for the first several years. One thing to note about FHA and PMI, even if you stay in the house long enough to reach the 20% equity barrier, you will still be paying PMI unless you refinance to a convential-type loan. After you've reached the 80% loan-to-value ratio on your mortage with a convential loan, PMI goes away.

 

[cyflier]

shop around.

I'd hit a national bank like a WF
I'd hit a local bank/credit union
And then you may hit a broker.

If you go to a broker that a realtor refers you to, that is fine, but I wouldn't do that. Ask the realtor for their referral fee if you do want to or if the realtor insists.

Realtors can not take a referral fee for their client using a certain lender. I am an agent in Kansas City, I would never think of doing that. I do recommend certain banks, but only because I know they do a good job and will get my client a good deal.

 

[CyPride]

Realtors can not take a referral fee for their client using a certain lender. I am an agent in Kansas City, I would never think of doing that. I do recommend certain banks, but only because I know they do a good job and will get my client a good deal.

Can not take is different than will take. If you don't think that happens or can happen, Ok i guess.

Also what has always bugged me about realtors is when they are so pushy about trying to get you to their 'in-house' mortgage person. I understand why they would want that, but it was always a turn off to me.

 

[azepp]

Can not take is different than will take. If you don't think that happens or can happen, Ok i guess.

Also what has always bugged me about realtors is when they are so pushy about trying to get you to their 'in-house' mortgage person. I understand why they would want that, but it was always a turn off to me.

Our agent's broker pre-approved us but when it came time to get the actual deal done we shopped and ended up going with a local bank.

 

[cyflier]

Can not take is different than will take. If you don't think that happens or can happen, Ok i guess.

Also what has always bugged me about realtors is when they are so pushy about trying to get you to their 'in-house' mortgage person. I understand why they would want that, but it was always a turn off to me.

I understand that. I never use my in house person, because she never has the best rates.