Profile picture for Woody189

Should I Get a Bunch of Pre-approvals? Or Should I Pay Off My Debt?

Hi,

My current income is $37,500 annually and I'm looking to purchase a $106,000 condo. I have been pre-approved for a mortgage of $96,000 @ 4.5% for 30 yrs fixed. 

I'm trying to get an affordable income home, and upon approval, I will have to secure a loan within a month or so. 

I have about $7,000 in student loan debt and $5,000 in high interest personal loan/CC debt. 

My credit was run on September 26, and I'm wondering if I should go crazy and get a bunch of pre-approvals over the next few days and try and find the best rate. I would like to utilize my 14-day window where having my credit run additional times won't hurt my score. At the same time, I would like to try and reduce some of my debt before applying.

I'm wondering if I'd be better off paying off ~$4,000 in loans and THEN applying for mortgages, or if I'd be better off pocketing that money or using it towards a larger down payment. Would the $180 or so decrease in my monthly debt lower my interest rate?

Assuming I get this property, I wouldn't need a larger loan. If I wasn't approved for the affordable housing property, then I'd need to worry about getting the largest loan possible to buy a more expensive property. 

What do you think? Should I apply obtain as many pre-approvals as I can right now?

Should I try and pay off my debt ASAP and then apply all over again?

Thanks






  • October 06 2013 - US
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Answers (5)

Profile picture for daveskow
if you have pre approval you need with current situation no need to pay off more debt ( unless you plan to do this anyway )
  • October 06 2013
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Profile picture for Woody189
Thanks for the responses. I guess I was a little confused about the process, but you answered my question about whether or not I should get more pre-approvals. However, my question still stands as to whether or not I should try and pay off some outstanding debt before actually obtaining a mortgage. Would it make sense considering I don't need to increase my loan amount?
  • October 06 2013
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Profile picture for daveskow
stick with what you have 
  • October 06 2013
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Profile picture for wetdawgs
"I would like to get a bunch of pre-approvals".   Is there a reason you need more than one?    A pre-approval is not an approval and usually one is enough.  A pre-approval also expires, so getting a bunch today and then waiting for a few months means that you'll have to start all over.

  • October 06 2013
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Profile picture for Donna Ryder
I would recommend speaking with the loan officer that you have already received your pre-approval with, provided you are comfortable with their expertise and advice and ask the lender these questions.  A reliable, knowledgeable lender will know how to guide you to the best way to proceed.  It is also recommended that the lender you use is recommended by someone you trust and respect.  You could also get a second opinion, but it is really not necessary to shop around for rates as most of the banks rates are competitive but the fees will vary from bank to bank, so you could find out what each bank's fees are and compare.  [deleted by Zillow moderator. Please see our Good  neighbor Policy for posting guidelines]
  • October 06 2013
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