SDN members see fewer ads and full resolution images. Join our non-profit community!

after the first pre-approval

Discussion in 'Finance and Investment' started by nutmegs, Mar 21, 2007.

  1. nutmegs

    nutmegs ASA Member 7+ Year Member

    913
    0
    Jul 15, 2003
    hi everybody, I applied for my first preapproval the other day and got the answer 3 hours later: approved for 190K (0 down, no pmi, 1 point originiation fee, 5/1 ARM, qualifying rate 5.875, APR 6.2329).

    a few questions:
    1. should I apply for a few others NOW (in this 14 day credit check period), or use that preapproval to get to a contract on a specific house and then shop?

    2. what else is included in a good faith estimate, and do I need to ask for that separately right now?

    3. can I ask this person to give me a quote for a 30 year fixed as well?
     
  2. SDN Members don't see this ad. About the ads.
  3. g3k

    g3k SDN Donor 5+ Year Member

    615
    20
    Aug 2, 2004
    You can ask this person for a 30 year fixed. But what you should do is contact various different lenders/ banks and get the quotes on the same day, because rates vary day to day. If you don't have a house in mind yet, then yes, use that preapproval to get a contract on a home.
    After you sign the contract on the home, shop for rates. Just make sure the rates you are comparing are the rates given to you on the same day.
    A good faith estimate would include the price of the home, the closing costs, the downpayment, your monthly payments and a few other numbers. You can get that after you know what the price of the home you would like to buy is.
     
  4. Sol Rosenberg

    Sol Rosenberg Long Live the New Flesh! 10+ Year Member

    3,534
    6
    Feb 11, 2006
    Living in America
    A couple of things:

    - Is this a pre-APPROVAL or a pre-QUALIFICATION?
    - If you have excellent credit, this is not such a good deal. APR of 6.23% when paying a point is not so hot, esp. for an ARM. (I was pricing 30-year fixed loans at around 5.9% APR with lower lender fees just yesterday)
    - Have you locked the rate? Bankrate.com has a bunch of experts "predict" where rates are headed. FWIW, they currently think rates are headed lower, so if you trust that advice, you might not want to lock just yet.
    - I don't know any lender that doesn't charge PMI for 0 down (unless this is a VA loan, maybe? An 80/20 maybe?) Luckily, PMI on houses purchased this year will be tax-deductible, and for low down payments (I will be making a low down payment on the house that I will purchase to live in through medical school) it seems to me that a 95% loan + PMI may be better than a 80/15/5, for example (though that didn't use to be the case.)

    Now to answer your questions:

    Not sure what 14-day period you are talking about. If this is a true pre-APPROVAL, they have already pulled your credit. Not so for a prequal, IIRC. It's best to shop rates/costs and have your financing lined up (and get prequaled -- not necessarily pre-approved) BEFORE house-hunting. Every time another broker pulls your credit, it will show up and your credit score will take a 2 point ding, IIRC.

    You should've received a good faith estimate before prequaling/going through the pre-approval process. You really need to know what other lender fees are attached to that rate. If there are additional lender fees (underwriting fee, processing fee, some of them even add an internet application fee) you need to know about them, although they are rolled up into the APR (which isn't that great, IMHO, leading me to believe that there are additional fees, even above and beyond your origination point.) You need this ASAP. The lender can only provide an estimate of title insurance, fees charged by your title company/attorney, etc, but these usually only amount to approx. $1k or thereabouts (depending upon your state, etc)

    Of course. Didn't he talk to you about all the products that they offer before you prequaled/pre-approved?

    I highly recommend that you look up rates on www.bankrate.com, sort by APR, and go from there. Be really careful with ARMs.
     
  5. adcomm

    adcomm snitch 5+ Year Member

    260
    0
    Jan 4, 2006
    committee near you
    probably a resident loan
     
  6. nutmegs

    nutmegs ASA Member 7+ Year Member

    913
    0
    Jul 15, 2003
    this is for one of the "doctor" loans, acknowleged not to be the best rate out there but figured I would use it as a starting place because I don't have easy access to a downpayment, and I am just by the numbers not the greatest applicant. I my FICO is in the 700-720 range and I submitted only my income (43K as a first year resident). this was a true pre-approval, not a pre-qual. the 0 down/no PMI is one of the perks of these resident loans. I appreciate your advice but some of it seems to be contrary to the general consensus. the 14 day period is a window where you can have your credit pulled multiple times without it showing up on the next one (ie, if you are planning to shop multiple lenders, apply to all within the same 2 weeks). this has been verified by a bunch of people and while I can't find it in the book I'm flipping through at the moment, I believe I read it as well. It also seems more intuitive that if I am going to be shopping for real estate from another state, it will be helpful to be pre-approved before doing that shopping in the interest of time and seriousness. Again, I don't already have a house in mind and so have not locked anything (or paid money to anyone). Thanks again.
     
  7. mshheaddoc

    mshheaddoc Howdy Moderator Emeritus 15+ Year Member

    43,162
    80
    Apr 24, 2002
    Wild west of Mistytown
    Yes you have 2 weeks to pull your credit and it won't affect your credit score, BUT ... that usually means you'd have to "lock" your rate for whenever you purchased it. You don't want to go through this same headache in another 30 days when you figure out what you want and then have closing in another 30.

    I'm sure you already know this but remember to get the "terms" of this loan. Some of them you might be better off with a 30 yr fix rate which in actuality (which I'm finding interesting) it only fixed for 3-5 years but don't ask me WHY they are calling it a 30 yr. Bad marketing on their part is my opinion because its not a true 30 yr product. You might actually get a BETTER rate looking at the 30 yr product (i've found 2 companies that this is true for).

    I would do all the shopping right now for the reasons I mentioned above.

    And jota did a decent job on the GFE (good faith estimate). You really need to know the fees and that is where alot of these places get you. Get a break down of the fees!

    Side note: I've considered doing a 103% loan only because I know we are looking at a house that is under market.

    Good luck and you seem to be heading in the right direction.
     
  8. acberry

    acberry

    2
    0
    Mar 27, 2007
    APR calculations on ARMs can get jacked around because your initial rate is lower than the fully indexed rate, so your probably better off getting the GFE and comparing cost with other lenders. Rate on a 100% loan at 5.875% with no MI ain't bad. Here's a link to APR on ARMs http://www.bankersonline.com/vendor_guru/math/math_cmp030104.html
     
  9. Jocomama

    Jocomama Make 'em bleed! 2+ Year Member

    1. Do not pay any origination fee. Not cost effective unless you are in a 7yr arm or 7/23 baloon.
    2. The yield curve is so tight, that 30yr fixed is maybe 0.25% above 5yr ARM - and unless you are for sure, out in 5, go with the 30.

    3. Credit checks are good for 30 days. You can have 3 other banks pull your credit within that time, and it will NOT affect your credit. That's the way Beacon, Fair Isaac and Emperica computer models score.

    4. ALWAYS do a pre-approval. A prequalification is a worthless sheet of paper. Also, if you bank charges you any money at all - the pre-approval will include a copy of your employment contract, your bank statement, a complete 1003 application. Why? Because it is the sure thing - it must legally go to processing then underwriting ( you must get a Truth IN Lending and Good Faith Estimate mailed to you after 3 days - federal law) - and your pre-approval is a real one. The rest are worthless pieces of paper and are worth nothing (I've seen people lose money- thats for another day)

    5. Quote on a rate is worthless unless you have a contract to buy a house. Then, you discuss locking the rate, which requires a rate lock disclosure and/or rate lock agreement, depending on the state. The Good Faith does NOT guarantee rate.

    6, Do NOT go getting other pre-approvals, just look for the house.

    Thanks

    Please read my sticky on Mortgage 101 at begining of thread.



     
  10. polygonal

    polygonal Junior Member 10+ Year Member

    115
    2
    Aug 4, 2006
    OK, I'm new to this. I have a pre-approval pending. Are you saying I should not shop around for other deals yet? Wait until I have a contract on a house then shop? What's the problem with getting a few preapprovals?

    It seems like I cannot get a GFE unless they see all my info (credit, assets, etc.).
     
  11. Sol Rosenberg

    Sol Rosenberg Long Live the New Flesh! 10+ Year Member

    3,534
    6
    Feb 11, 2006
    Living in America
    See his #5 from his previous post.

    The GFE for lender's costs should be solid without them pulling your credit, looking at your assets, etc. It's the rate that will depend upon your creditworthiness, etc....and even that rate quote is worthless until you lock, as rates drift around day-to-day.

    When you shop for better deals:

    1. You MUST shop for them all on the same day (see above.)
    2. You should do it right when you are ready to lock (i.e. after you have a contract, etc.) That way, you can pick the best deal on that day and go with it. Things get confusing if you spread the negotiations out over multiple days, because they can jack around with rates and costs based upon conditions for that day. i.e. if you try to negotiate on lender's fees, the broker will ask you what rate you have and what fees the other guy is quoting you. If you got that quote yesterday and rates went down today, he can say "Sure I'll match/beat that rate and those costs" but now he is making more on that loan since rates actually went down. Think I am gilding the lilly here? This happens to me ALL THE TIME, and is why I do all my shopping around when I am ready to lock.

    This is for conventional loans. I'm not sure if "Doctor's loans" are different...
     

Share This Page