How Long Before Buying Should I Get Pre-Approved?
Being prepared to buy a house doesn't just consist of obtaining a pre-approval letter from the bank. There is much more to the process of becoming a homeowner that should not go unnoticed. A question commonly asked is, "How long before looking at houses to buy, should the pre-approval process begin?"
Before answering, let's explore what is involved in getting pre-approved in the first-place! A quick, 5-10 minute application will start you off where you will answer questions about
* prior residency and employment history for the most recent two years,
* current asset balances,
* years in school,
* real estate owned,
* current housing expense,
* personal identifying information (i.e., social security number, date of birth) to request a copy of your credit report from Trans Union, Equifax, and Experian (credit bureaus),
* answer 15 questions about prior history of judgments, bankruptcy filings, foreclosure/short sale/deed in lieu, defaulted federal debt, child support/alimony/separate maintenance, down payment, co-signing, citizenship, occupancy, prior property ownership (to identify first-time homebuyers),
* complete information for government monitoring (race, ethnicity, sex).
Once this application is submitted, I will request a copy of your credit report, review all of the information on the report and application and give you a call to go over any additional information needed or questions I may have at that time.
...But Won't A Credit Inquiry Hurt My Score?
The lowest impact to your credit score is a mortgage inquiry and it is a necessary part of the home buying process. Any worry you have about your score lowering from an inquiry is misplaced and only serves as a mental barrier preventing you from taking action today.
Buying a house with a mortgage is not a lot of paperwork for the amount of money that you are borrowing so knowing how you have paid creditors in the past (and present) plays a large part in how the bank will determine how much to lend to you and on what terms.
Your credit report will be valid for 120 days from the initial credit check and there is a very likely chance that the bank will need to review another copy of your credit report before (and possibly after) closing. During the time from when you decide to buy a house until you close, you will need to be extra careful of opening any new debt or making changes to existing debt. Before you do anything, you should consult me to ensure you aren't doing anything that can jeopardize your financing approval.
In most cases, it benefits the homebuyer the sooner they know what their credit scores are since most people do not regularly check what is reporting on their credit reports. When you apply for a mortgage and something pops up on your report that you were unaware of, it can unnecessarily complicate the approval process so the sooner you submit it, the better!
We have a certified credit expert that is willing to talk you through what opportunities you may have to increase your credit scores before you close on your purchase. If your higher scores put you into a lower-risk qualifying bucket, you could save tens-of-thousands of dollars in interest!
Once you are pre-approved, I will send you a list of documentation that will be required to approve your loan. These items can be submitted any time prior to getting under contract with a house and I recommend sending the documentation in as soon in the process as possible so I can make sure you don't have any issues arise too late in the process.
Some of these documents, such as pay stubs and bank statements, may have to be updated closer to closing. Knowing this should not prevent you from submitting these documents initially.
The more we can educate you on what impacts your rate and repayment, the better decisions you can make as a homeowner. The main goal of homeownership should be owning your house outright and paying off your mortgage. Put a term on your debt and stop renting today!
Louis Baca Geneva Financial LLC Producing Branch Manager/Loan Officer
NMLS 196378 NMLS 42056 (214)395-7630 Phone