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Three questions from a first-timer!

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kleahc
New Contributor

Three questions from a first-timer!

Hi! Three quick questions: (and please and thank you for your help!)

 

1. I am ready to look for my first home (see below for info) and need to know- once I prequalify (dear lord, PLEASE let me prequalify!) then I will start looking at properties with a realtor. Is there a limit to how long a prequalification lasts? I mean, do I only have acouple of weeks to dsecide on a house?

 

2. I accidentally overdrew my bank account last month. In applying for a loan, will they look at my bank statements, and will an overdraw like that hurt me? That never happens to me, I was truly at fault for being stupid in that case.

 

3. I would like to apply for an fha loan if possible. What online source do people find is the best? (Quicken? Lending Tree, etc?)

 

Credit.  I have a 670 credit score after spending two years rebuilding after a series of medical emergencies left my credit in the toilet.

Income.  My salary is $46,000 per year. 

Source of income.  I am full-time employed and have been there for 4 years.

Monthly debt payments.  I have no outstanding debts, and about $500 on a credit card

Employment: Have worked at my current job for 4.5 years, and have worked in my field for 13 years.

Assets/Reserves.  I have a 401k (but it isn’t much) and I am getting the money for the down payment as a gift from my parents. They are willing to provide up to $25,000.

Location.  Asheville, North Carolina.

Property.  Single Family home.

Value.  Most of the houses I have looked at are around the $160,000-$189,000 mark.

Occupancy.  Primary residence.

Transaction Type.  This would be a first home purchase.

Message 1 of 9
8 REPLIES 8
Darrell82
Established Contributor

Re: Three questions from a first-timer!

2. I accidentally overdrew my bank account last month. In applying for a loan, will they look at my bank statements, and will an overdraw like that hurt me? That never happens to me, I was truly at fault for being stupid in that case.

 


I do think they will want to see your bank statements. I just started the process myself on buying some property under a mortgage loan and they look through my bank account for large deposits only to see if i have got money else where to help with this. They questioned all deposits other then income that was over $1,000. I never over drew my account so i am not sure if that is one thing they are looking for.  Hope this helps some. And good luck in getting prequalified. Also i am not sure how long a prequal lasts. I ended up buying 2 days after prequal.




Message 2 of 9
edcampbell613
Contributor

Re: Three questions from a first-timer!

Congrats on your 1st home.

 

1) I have seen pre-quals last between 30 days and 4 months, usually they only  need to repull credit if it does expire.

 

2) As long as there is not a history of it you will be fine (most mortgage companies) You will just need to provide a letter of explanation why it happened and how you plan on it not happening again.

 

3) Stay off line, find a local mortgage comapny (broker) STAY away from Quicken! 

 

Why FHA? Is it about the down payment? In NC there are a few lenders that have a conventional 97% LTV loan that is a much better product, 

 

Based on your income you should be fine for it.

Message 3 of 9
Peter1142
Established Contributor

Re: Three questions from a first-timer!

Credit reports typically last 90 days, and if you need a fresh pre-approval, they will just give you another one. I haven't seen an expiration date on my pre-approvals but if they are older than 30 days a new one is typically requested.

 

A single overdraft shouldn't be an issue. You might need to provide a letter explaining it, or you might not.

 

I believe the 97% LTV Conventional has been discontinued as of 2014. At least that is what I have read on these forums.

 

 

Message 4 of 9
StartingOver10
Moderator Emerita

Re: Three questions from a first-timer!

Agree with Ed on the almost everything he said.

 

The only change I would make to his post is to add this:  If you go to a lender - go to a correspondent lender or mortgage banker rather than a 'broker' that does not fund the loan. The difference between the two is the mortgage banker/correspondent lender funds their own loans. They have their own underwriter so when you are approved, you know for sure you will be able to close( unless you change your financial condition between the time of approval and the time of closing). If you go to a broker that doesn't fund their own loans, they can't give you a true approval without sending your file out to the lender that will fund the loan.

 

I agree with his assessment about Quicken and Lending Tree - find a good Realtor in your area and get a referral to a lender they know and trust.

 

For the gift funds there is a specific 'trail' that the lender needs to see so make sure your parents haven't given you the funds now. Wait until you speak to your lender and get the gift letter form and his instructions. It's not complex. It's just the lender needs to see exactly where the funds come from ...

 

Explaining one OD or NSF is easy and won't be an issue with the lender. Anyone can make an error.

Those buyers that have been turned down due to too many NSF's and OD's have had too many and show a pattern.

Message 5 of 9
kleahc
New Contributor

Re: Three questions from a first-timer!

Thanks!

 

Yes, the FHA loan is for the lower down payment. And my parents ARE gifting me the down payment. So, I should get a form from my lender before they give me the gift?

 

New question (sorry!) So, my credit is decent now, but was much lower six months ago. Will a mortgage banker have a problem with that?

Message 6 of 9
edcampbell613
Contributor

Re: Three questions from a first-timer!

We are still doing the 97% Conv

 

Max 85,0000 joint income allowed

Reduced MI, 18% for LTV95%-97%

DTI max 45%

680 min fico

 

And we are a corresponding lender.

 

Ashville NC, I am in Charlotte NC

 

Message 7 of 9
edcampbell613
Contributor

Re: Three questions from a first-timer!

and getting your credit score up 10 points is easy with our program

Message 8 of 9
edcampbell613
Contributor

Re: Three questions from a first-timer!

It is much easier to have the money sitting in your savings for 60 days (2 months statements) before starting the loan application, if they see a large deposit they will want to know where the money came from. If it comes from your parents they will ask for 2 months of your parents savings account where the funds came from to make sure the money was not borrowed gift letter stating there is no repayment

 

Regarding your previous credit scores, the lenders have no idea what your previous monthly FICOs are. Just your payment history so keep them clean.

Message 9 of 9
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