Profile picture for dpuma8

What is the point of pre qualifying if I don't want a house for the max I could get?

I am in a little bit of a bind here.  I budgeted with my wife what we could afford.  We are looking in Sacramento for a house in the low $200,000's.  We want the lowest payment possible.  We are dealing with my wife's brother's friend who newly because a real estate guy so he wants business.  I gave him our numbers and he says based on what we gave him, we could buy a house for $320,000. We want to start payments in January 09 so he says we need to close in November.

 

So here are my questions.

1) If I don't want the most house we can get based on my income and debt numbers, why do I need to get pre qualified?

2) Does getting pre qualified lower FICO?  My score is the lowest and I have a 713 FICO.  I see that to get the best rate, I need a 720 at least.

3) Any other comments or advice?

 

To me since I want to raise my FICO and I want a cheap mortgage, it makes more sense to find a house and then pre qualify.

  • July 24 2008 - US
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Answers (7)

1) You don't

2) No,, to get the best rate/pricing  lowest midscore of  you and Mrs.. 720

3) An "approval does last for 120 days in most cases (some updates of income/assets maybe), so anything past AUG 1, would get you through end of NOV... Finally, getting "approved"  takes a day at the most... that is with human intervention validating the data....  Tell Sparky to relax about qualifying and keep paying your bills (get yours paid down a little more if you can)  Then pull credit/apply Mid OCT at earliest.. Close end NOV...  Good2Go!

  • July 24 2008
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Profile picture for Chris Corica

Pre-approved first so realtors and sellers know they are dealing with a qualified buyer. You may not ned the max but they need to know you qualify for at least the price range you are looking in.

  • July 24 2008
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Profile picture for shapiroamg

If the RE guy continues to only show you that maximum, you might need a RE guy/gal. You are the client.

  • July 24 2008
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The only beneifit to getting pre-qaulified early is to give you a chance to improve your credit.  Most lenders have the ability to pull a report in addition to your credit that can make suggestions on inceasing your credit score.

 

The sooner you have that info the more time you have to achive your goal.

 

I had a client that waited untill the 11th hour to allow me to pull his credit.  Turns out by using a credit card and leaving a $10 balance his score would have climbed over the 720 mark.  Unfortunately he didn't know that was what he needed to do until it was too late to have it impact his credit score. 

 

If the guy is new to the business he may not even know what I am talking about, Ask him about it Kroll Factual Data Calls it Credit Expert.

  • July 24 2008
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dpuma8, I would leave the house hunting and contract to your wife's brother's friend. I would get with a loan officer or mortgage banker and get prequalified. There are several reasons: What formula did he use to determine you can afford $320k?

Are you self employed or 1099? If so, this could affect your ability to buy in the low $200's.

Are you putting any money down or want 100%?

How much money will you have for reserves?

Where did you learn of your credit score? If that score comes directly from 1 of the 3 credit bureaus from ordering your credit report, that score could be way off.  

These are a few reasons why you should get with someone who lends money to find out what you can buy. The realtor is new so that is even more reason to get with a broker or mortgage banker.

  • July 24 2008
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Profile picture for Rob Cochems

dpuma,

 

Yeah you can probably qualify for $320k, but stick to your budget, do not buy above your means. 

 

Also it is not easy to buy in Sactown right now, be prepared for that, and make sure your Realtor is on the ball

  • July 24 2008
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Dpuma most lenders will prequalify you in advance in order to help or guide you in the purchase and should be seen as a benefit. It actually costs them money to pull your credit and time to create a file and review it in order to make recommendations. A good loan officer can help you work towards improving your score if needed and also educate on what types of things could hurt your ability to qualify, like opening new accounts or buying new cars. As far as being qualified to buy a more expensive house I would recommend sticking to what you and your wife budgeted for yourselves. Just because you can doesn't mean you should.

  • July 24 2008
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