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Is it to early to get pre approved?

My wife and I make a good income (of about 100k) with stable jobs (we have both been at our current places 5 years or more). We have 2 small kids (2 years old and 9 months). We have no credit card debt. We have about $450 in student loan payments and a $300 car payment. My credit score is about 720 and my wife is about 820. 

Our goal for the last several years was to become debt free before we purchased. We were aggressively paying on our debt and got rid of 20k in credit cards (and have remained credit card debt free for at least 2 years now), paid off about 40k in student loans (have about 22k left).  

However about about 6 months ago the pest problem in our apartment building got really, really bad. Also, we live in a high crime area (3 murders in the last 8 months within a few blocks of where we live) which used to be fine when it was just my wife and I but with little kids we are starting to feel a little uncomfortable.  We were going to rent elsewhere but were not happy with what was available on the rental market (anything nice is insanely expensive) We decided to hang tight and start saving as much as we can and try to get a house with something that has low upfront cost.

We have no idea when we're ready to even start talking to mortgage people. The type of home we would like to buy would cost around 200k. 8k is enough for an FHA downpayment but obviously not enough for closing cost. I know there are some ways around that (seller-paid, lender credit, state program for financing of closing cost, etc.). Also at our saving rate of 1k a month, we might have the closing cost by the time we have found a property we like.

Should we start talking to banks/mortgage brokers now or should we hold off a bit more? And if you think we should wait, what amount is the right amount to start the mortgage/realtor/house-hunting process?

  • February 13 2014 - US
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Answers (5)

It's never too early to seek the guidance of a mortgage professional.  They will be able to review your financial information and determine a plan for your future home purchase. 
  • February 13 2014
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Hello there

It sounds like you are starting to get things in order and want to make a future purchase and your doing your homework (good job so far!) Keep monitoring your credit scores, sounds like your saving $$ for down payment, check the yearly taxes on the home, etc also depending on your region there are programs for 1st time buyers

Closing costs should be considered and yes some can be paid by the seller, but it sounds like your doing your homework and starting to get things in order and that's a good first step!.. Speak to several lenders and keep monitoring your finances and also check areas/neighborhoods you and your family may like, but your on the right track so far. .. There will be documentation and paperwork needed (W2's for each borrower, Taxes, ect) ..

Hope this helped a lil, if you have any other questions please feel free to reach out and Good luck..!!
  • February 13 2014
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It is never to early to go to a lender or your choice to get pre-approved. Your credit is great and you have stable jobs so you will be fine. 

Good Luck in your home search!
Brian 
  • February 13 2014
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I forgot to add. We have 8k saved.
  • February 13 2014
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You should go on and seek a pre-approval or commitment.  The professional you decide to work with can give you valuable guidance including the price range you should be looking in, any programs their institution may have that could benefit you and provide you with an estimate of overall costs.  

As for closing costs and downpayment..  Often, closing costs can be negotiated to be paid by the seller.  

So, my advice is have a consultation with a lending professional.  If all the numbers look right and you are ready.. find a REALTOR and start looking for your home!
  • February 13 2014
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