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  • Home Buying Questions

    Posted on Bogleheads as well but wanted to get a diverse set of inputs.

    We are gearing up to buy a home, about 3 weeks out from potentially making a serious offer. We’ve checked our credit reports and have an idea of what our scores are from Credit Karma (820/790). We will have a down payment that will be around 20% (suspect 18-23% given our needs and wide home price variation in the market we're looking at), and I’ve reached out to multiple physician loan companies to get an idea of rates and options in the event that we are below 20% down. Our serious home searching is expected to start in 3 weeks but could last until after the Summer. Questions:

    1. How soon before putting in a serious offer should one have a pre-approval letter?

    2. Is a pre-approval letter a hard pull? I’ve seen articles saying two different things on this.

    3. Does it matter who gives you the pre-approval letter if you’re going to shop rates on the back end anyway?

    4. I’m sure this varies by lenders, but how long does a pre-approval last?  I’m somewhat concerned about needing to get another given the fact that our time frame is so large (we are willing to keep waiting for a good home but are willing to jump on a good one in 3 weeks).

    5. When it comes time to negotiate rates is there any point to having my wife on the loan since my credit is better? (Not sure if going at it with one score above 800 vs with 2 that includes one not above 800 is meaningful)

    Thank you all. Appreciate any feedback.

  • #2
    1.) It depends on the house. I've seen some nicer houses where they want a pre-approval letter to even let you see the house.

    2.) That I don't know. Credit pulls within a certain time frame are considered one. Your credit scores are such that even if you have credit pulls outside this time line it won't affect what kind of rate you can get.

    3.) I think they just want someone reputable (that is willing to lend you the money) to say that you can afford the house.

    4.) Ours was good for about 4 months but I'm sure there's probably some slight variation by lender.

    5.) Anything 750 and above is considered excellent so your rates with be similar regardless if it's just your or you and your wife. You'll probably want both of you on the deed for other reasons.

    Comment


    • #3
      3.) sometimes lenders pulls out their pre-approval letter if you decide not to go with them. Turnaround on pre-approval is pretty quick. i dont think you to have it on hand before you decide put offer. (This depends on area as well)

      I would say also focus on which lender you want to go as well some of them takes their time etc. Our approach was to find a good load officer first (check zillow etc) then contact the lending company for a mortgage. Also if you have Costco membership check the rates from Costco as well. It saved us around $1200. We had a good experience with https://www.zillow.com/lender-profile/CountOnCash/  and everything was online pretty much.

      Good luck!!!

       

       

       

      Comment


      • #4




        Posted on Bogleheads as well but wanted to get a diverse set of inputs.

        We are gearing up to buy a home, about 3 weeks out from potentially making a serious offer. We’ve checked our credit reports and have an idea of what our scores are from Credit Karma (820/790). We will have a down payment that will be around 20% (suspect 18-23% given our needs and wide home price variation in the market we’re looking at), and I’ve reached out to multiple physician loan companies to get an idea of rates and options in the event that we are below 20% down. Our serious home searching is expected to start in 3 weeks but could last until after the Summer. Questions:

        1. How soon before putting in a serious offer should one have a pre-approval letter?

        2. Is a pre-approval letter a hard pull? I’ve seen articles saying two different things on this.

        3. Does it matter who gives you the pre-approval letter if you’re going to shop rates on the back end anyway?

        4. I’m sure this varies by lenders, but how long does a pre-approval last?  I’m somewhat concerned about needing to get another given the fact that our time frame is so large (we are willing to keep waiting for a good home but are willing to jump on a good one in 3 weeks).

        5. When it comes time to negotiate rates is there any point to having my wife on the loan since my credit is better? (Not sure if going at it with one score above 800 vs with 2 that includes one not above 800 is meaningful)

        Thank you all. Appreciate any feedback.
        Click to expand...


        Some owners want preapproval before they will show there home but most do not care.  It should not be hard to get preapproval unless you are buying a very expensive home or will be on the boarder for their preferred debt to income ratio.  You can get the pre approval from anyone but when you make the contract they usually stipulate that you have so many ways to secure a mortgage.  It can be from another bank.  Usually it is a month so that is plenty of time.  If my experience the preapproval was good for 6 months but I am sure that varies.  You can have the bank run the numbers multiple ways with and without your wife etc.  I usually shop 2 local and 1 national bank and so far the local bank has always been the easiest to deal with and gave the best rates.  I am upfront with the bank that I am shopping around and I feel that keeps them honest.   If you can swing the 20% that makes things simple and you do not need to ask any favors from the bank but if you are slightly below they will tend to work with you.  I found that they were surprised that we had 20% to put down and did not want to escrow our taxes.  From talking with them it seems not many people do that.

        Take your time and look around.  Enjoy the process.  Remember that your needs change and have realistic expectations about how long you will be in this house and how your family will grow/change.

        Best of luck!

        Comment


        • #5




           

          5. When it comes time to negotiate rates is there any point to having my wife on the loan since my credit is better? (Not sure if going at it with one score above 800 vs with 2 that includes one not above 800 is meaningful)

           
          Click to expand...


          It's been awhile since we did our MD loan (5/3 for what it's worth) but things ran primarily through my wife as she had the better credit score.

          Can't remember all the details but there might be something there.

          Comment


          • #6
            I just went through this process. I believe that pre-approval is hard pull. The approvals I had were for 90 days. I had to justify for all the hard pull during the verification process with the lender so do keep track of them.

            Clean up your bank statements for at least 2 months prior to the mortgage application. You have to justify for everything (cash deposits, bank transfers etc). I took the loan out alone (I have higher income) and I’m glad I did. Otherwise it’s more paperwork and headache since we have separate bank accounts.

            Comment


            • #7




              Posted on Bogleheads as well but wanted to get a diverse set of inputs.

              We are gearing up to buy a home, about 3 weeks out from potentially making a serious offer. We’ve checked our credit reports and have an idea of what our scores are from Credit Karma (820/790). We will have a down payment that will be around 20% (suspect 18-23% given our needs and wide home price variation in the market we’re looking at), and I’ve reached out to multiple physician loan companies to get an idea of rates and options in the event that we are below 20% down. Our serious home searching is expected to start in 3 weeks but could last until after the Summer. Questions:

              1. How soon before putting in a serious offer should one have a pre-approval letter?

              2. Is a pre-approval letter a hard pull? I’ve seen articles saying two different things on this.

              3. Does it matter who gives you the pre-approval letter if you’re going to shop rates on the back end anyway?

              4. I’m sure this varies by lenders, but how long does a pre-approval last?  I’m somewhat concerned about needing to get another given the fact that our time frame is so large (we are willing to keep waiting for a good home but are willing to jump on a good one in 3 weeks).

              5. When it comes time to negotiate rates is there any point to having my wife on the loan since my credit is better? (Not sure if going at it with one score above 800 vs with 2 that includes one not above 800 is meaningful)

              Thank you all. Appreciate any feedback.
              Click to expand...


              From what I remember, the pre-approval letters are not hard pulls at all.  In fact, I think they are based solely on what you tell the mortgage lender.  For a physician able to say that they have $XXX,XXX salary and not much other debt, you'll have a pre-approval letter in minutes. I don't believe you'll need to worry about them expiring.  No it doesn't matter who gives you a pre-approval letter.  It's purpose is to simply show the seller that you're a serious buyer and to help them take your bid seriously.  They don't care who your financing comes from as long as they get paid.

              Also, when you're shopping for mortgage rates, multiple hard pulls in a short time will not adversely affect your credit score because they recognize you're shopping.  Sometimes a lender will ask you to explain the multiple hard pulls during the final underwriting stage, but it's just a formality.

              Leave you're wife off unless you need her income to get approved.  It won't help your rates to have her on there.

              Comment


              • #8
                1. I would get letter right before you start your house hunting in earnest.

                2. When we bought our house recently, pre-qualification letter was not a hard pull. Basically told them my income, debts, house price and they emailed a letter within minutes.

                3. Pre-qual/approval letter doesn't matter who its from initially, but once you submit an offer, there is usually a stipulation saying you can't change lenders without buyer approval.

                Some of the difficulty with finding good information about lender letters is that they differ in their scope. Some letters (pre-qual/pre-approval) reflect that the lender had a phone conversation with a live body. This is the least valuable letter, but often sufficient in a buyer's market. A better letter, which does involve a hard pull, is essentially sending your file through underwriting prior to beginning a home search. These are the most valuable lender letters because when the seller's agent calls your lender, they can tell them they have already verified employment, credit worthiness, assets, liabilities, etc and that they should be able to fund the loan as long as there are no problems with the house (inspection/apprasal issues). With the pre-qual letter all the lender can say is what you have told them over the phone, often with no verification. If there are multiple offers on a house, the offer with more of the financing leg work and stronger downpayment often wins as financing problems are the number one reason house sales fall through.

                4. Don't remember there being a specific expiration date on the letter. Probably varies on lender as another person said.

                5. Probably doesn't matter. Both credit scores are excellent. You can always have it recorded in both names even if only one of your names is on the mortgage application.

                 

                Comment


                • #9
                  Thank you everyone. Will give an update as things progress.

                  Comment


                  • #10
                    We were able to get pre approval letters in under an hour. Every time we raised our offer, the mortgage broker raised our pre approval to match the offer. They claimed the pre approval should be close to the offering price because if the seller sees a huge number they’ll try to extract more in negotiations. I don’t know if that’s true or not, but based on income/debt we could have bought a house multiples of what we did. But they only ever wrote the letter for the offer/negotiation price.

                    Comment


                    • #11


                      Also if you have Costco membership check the rates from Costco as well. It saved us around $1200.
                      Click to expand...


                      I second the recommendation to look at Costco lenders.  I went with a different one than "justlearning" used, but had a good experience with a refi.  (The initial purchase through USAA was a trainwreck.  Had to stay on them twice a day and they still nearly messed up closing.  This was due to the CSR, not sure if I'd paint the whole company with a broad brush.)

                      In addition to the doctor loans, you may want to look at VA loans as well.  You can get a loan in excess of the county VA loan limit.  You just have to make a downpayment on the amount in excess of the county limit.

                      If you still are active duty and don't have a VA rating, you would have to pay the origination fee, so that might not be as good as a doctor loan.

                      Comment


                      • #12
                        Preapproval is basically a income/debt ratio calculation.

                        For a number of reasons, you will probably want the house in joint name. When you actually apply for the loan, the lender will probably want both names on the loan. Only if one of you has some credit issues would I suggest omitting the spouse. Not sure what purpose it would serve.  Your loan can be rejected for a number of reasons besides credit. Make sure to include financing contingency.

                        Comment


                        • #13




                          Posted on Bogleheads as well but wanted to get a diverse set of inputs.

                          We are gearing up to buy a home, about 3 weeks out from potentially making a serious offer. We’ve checked our credit reports and have an idea of what our scores are from Credit Karma (820/790). We will have a down payment that will be around 20% (suspect 18-23% given our needs and wide home price variation in the market we’re looking at), and I’ve reached out to multiple physician loan companies to get an idea of rates and options in the event that we are below 20% down. Our serious home searching is expected to start in 3 weeks but could last until after the Summer. Questions:

                          1. How soon before putting in a serious offer should one have a pre-approval letter?

                          2. Is a pre-approval letter a hard pull? I’ve seen articles saying two different things on this.

                          3. Does it matter who gives you the pre-approval letter if you’re going to shop rates on the back end anyway?

                          4. I’m sure this varies by lenders, but how long does a pre-approval last?  I’m somewhat concerned about needing to get another given the fact that our time frame is so large (we are willing to keep waiting for a good home but are willing to jump on a good one in 3 weeks).

                          5. When it comes time to negotiate rates is there any point to having my wife on the loan since my credit is better? (Not sure if going at it with one score above 800 vs with 2 that includes one not above 800 is meaningful)

                          Thank you all. Appreciate any feedback.
                          Click to expand...


                          1. Get one right away

                          2. I don't worry about it. Just try to get solid financing

                          3. Yes, get to know the loan agent you are using and who you will be dealing with during the settlement period

                          4. If it expires, just have it renewed. Should be fine as long as your particulars have not materially changed.

                          5. Probably no difference in rates unless the loan is large enough to require both of your incomes. But before stumping up a significant deposit/exchanging contracts, I would want unconditional pre-approval - for purchase of the house under myself or spouse or both and the bank would want the details and approval of whoever is purchasing.

                          Basically you want to ensure your financing with the bank is as solid as possible. And also have additional financing pathways. For instance, when I bought my first properties, I had relatives who could lend me the loan amount short term if there was a hitch in financing settlement, so there was no chance that I would have a problem with settlement, even if the bank stuffed up. Nowadays, I have alternative loan facilities on other properties that I can draw on to buy a purchase, so if there is a problem with the lender I can settle anyway.

                          You must ensure that you have the funds at settlement. Otherwise you are on the hook.

                          The pre-approval doesn't to my mind affect the sales negotiations much. The buyer will generally go with the highest bid and terms. If you fail to settle after exchanging contracts they will probably take your deposit and can sue you for further expenses (if this can be justified). But getting a comprehensive pre-approval will affect the headaches you experience getting settlement occuring smoothly and on time. If you get a crap conditonal pre-approval over the phone, I'm not sure what the point of that is.

                          Comment


                          • #14







                            Posted on Bogleheads as well but wanted to get a diverse set of inputs.

                            We are gearing up to buy a home, about 3 weeks out from potentially making a serious offer. We’ve checked our credit reports and have an idea of what our scores are from Credit Karma (820/790). We will have a down payment that will be around 20% (suspect 18-23% given our needs and wide home price variation in the market we’re looking at), and I’ve reached out to multiple physician loan companies to get an idea of rates and options in the event that we are below 20% down. Our serious home searching is expected to start in 3 weeks but could last until after the Summer. Questions:

                            1. How soon before putting in a serious offer should one have a pre-approval letter?

                            2. Is a pre-approval letter a hard pull? I’ve seen articles saying two different things on this.

                            3. Does it matter who gives you the pre-approval letter if you’re going to shop rates on the back end anyway?

                            4. I’m sure this varies by lenders, but how long does a pre-approval last?  I’m somewhat concerned about needing to get another given the fact that our time frame is so large (we are willing to keep waiting for a good home but are willing to jump on a good one in 3 weeks).

                            5. When it comes time to negotiate rates is there any point to having my wife on the loan since my credit is better? (Not sure if going at it with one score above 800 vs with 2 that includes one not above 800 is meaningful)

                            Thank you all. Appreciate any feedback.
                            Click to expand…


                            Some owners want preapproval before they will show there home but most do not care.  It should not be hard to get preapproval unless you are buying a very expensive home or will be on the boarder for their preferred debt to income ratio.  You can get the pre approval from anyone but when you make the contract they usually stipulate that you have so many ways to secure a mortgage.  It can be from another bank.  Usually it is a month so that is plenty of time.  If my experience the preapproval was good for 6 months but I am sure that varies.  You can have the bank run the numbers multiple ways with and without your wife etc.  I usually shop 2 local and 1 national bank and so far the local bank has always been the easiest to deal with and gave the best rates.  I am upfront with the bank that I am shopping around and I feel that keeps them honest.   If you can swing the 20% that makes things simple and you do not need to ask any favors from the bank but if you are slightly below they will tend to work with you.  I found that they were surprised that we had 20% to put down and did not want to escrow our taxes.  From talking with them it seems not many people do that.

                            Take your time and look around.  Enjoy the process.  Remember that your needs change and have realistic expectations about how long you will be in this house and how your family will grow/change.

                            Best of luck!
                            Click to expand...


                            Would you mind sharing which lender you used that gives a pre-approval that is valid for 6 months? Thank you!

                            Comment


                            • #15
                              The national back I investigated was BoA.  I think they said it was good for 6 months.  I know our local banks did because those are the ones I pursued.

                              Comment

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