PreQualifying: Raise scores first?

[Anonymous]

My husband and I are looking to purchase our first home in the very near future. We have been working on credit scores, downpayment, etc for the last two years. I'm curious about the pre-approval process. Do they prequalify to get a "range" you'll be approved for and then qualify you again once you find a specific home? Or does the prequalifying also count as the actual qualifying? Basically, how loose is the prequalifying process?

It is so hard to continue to be patient! haha

Christmas was rough this year (i'm a full time student) so to make life easier we used credit cards. Now all of my cards are paid down below 30% and his cards are below 10%. Both of our scores average in the mid 600s. Mine specifically are TU650 EX661 EQ663   I can't recall his exactly but they're similar. These scores do NOT yet reflect paying our credit cards down. We had about 80% charged up so i'm hoping our scores should see a good boost soon. A month, right?

So should we just go now and get prequalified so we can start looking? Or should we wait another month until our scores will reflect paying down those credit cards?

Thanks!

[Anonymous]

I am going thru the process now...You give them pertinent info with that being gross income and monthly minimum debt payments, available down payment (etc).......

They take this info and 'assume' average property taxes and property insurance in your area to give you a GFE (good faith estimate).......

Then you know your 'buying power' and know what your house price range is...then you shop. 

When you find a specific house you like, the Mortgage Broker can give you an estimated GFE for the specific property (based on what you want to offer) so that you know what your monthly payments might look like.

Scores are not enough of an indicator to know if you can qualify.  The experts would want to know gross income, monthly debts, DP amount, house price you are interested in etc. to even give you an idea of if you can qualify.

GOOD LUCK !!!!!!!!!!!!!  This is a great time to buy! 

[Anonymous]

Thanks for the response, Mel! Income, DTI, etc won't be changing anytime soon, all standard stuff, relatively minimal debt, although i am a student and i'm incurring plenty of student loan debt lol

So do they even check scores to prequalify? If they do, should we wait another month until our scores are higher?

[Anonymous]

Ok, i've spent hours reading the forums lol and i think i have a slightly better picture. Looks like FHA will be our best bet with 3.5% down. So under that assumption i think we're safe to go get a pre-approval (i didn't realize before that preapproval and prequalify were different!)

Here's our profile, please tell me if i'm overlooking anything!

Husband: 650/655/680

Job 6+ years  $45k/yr salary

Has Child support withdrawn biweekly $180.00

CC 170/2300

Student Loans $62/mo

Me: 650/661/663

Unemployed - Full Time Student with about $50k in deferred loans and still going for 2+ more years

Income - Child Support $10k/yr

3 CCs 1400/4900 total Fashion Bug 0/400 Wamu 0/2000 Juniper 1400/2500

Joint:

Car $181/mo

Debt Consol Loan $168/mo

As I mentioned - our current FICO scores don't reflect our paid off balances. His are listed on his report at 74% ratio and mine is 86% but they've been paid down.

We have roughly $7000 in savings right now.

[Anonymous]

Correction on my scores:

650/653/661

Also, no late payments in several years for either of us

And just to be thorough:

We're looking for a primary residence (our first home) in Manchester, New Hampshire (Hillsborough County).

(And apparently I just like talking to myself haha! Can't control my excitement, wish there was more late night forum activity! )

Message Edited by ladyofnight on 02-07-2009 12:49 AM

Message Edited by ladyofnight on 02-07-2009 12:51 AM

[DallasLoanGuy]

If you are over 620, I would rather see you save a few bucks for reserves rather than blow all of that cash on trying to raise your scores.

You can always pay down the cards later.

 Your approval has to be re-done once you find a property and the real numbers need to be run thru underwriting.

If the loan is within the guidelines you were approved under, there shouldn't be any problems. And the creit report should be good for 120 days.

[Anonymous]

Thank you very much Dallas, that answers my question on whether or not to wait

And just for clarification, the money has already been spent on lowering credit cards so i can't take that back unfortunately. But i'll take your advise and not worry about raising it higher for now. Thanks again!