When is too soon to shop for a pre-approval for a mortgage???????

[Anonymous]

Hello,

I don't want to purchase a home until next year when I will be able to get a transfer with my job.  I would like to see houses in the meantime to get a better feel on what I am looking for. Most of the online sites state that it is better to be pre-approved prior to looking at houses.  I called Navy Federal and inquired about a pre-approval and was told that they would not recommend me having a pre-approval unless I was planning on purchasing a home in the Next 4 months. 

Is there anything I could use in lieu of not having a pre-approval while searching/looking for a home? I read a few post above someone mentioned having in a binder the two most recent credit reports, tax returns and other sources of income, as well as VA eligibility.  Will they take me more serious with the information and explain that I am in the process of saving for a down payment in the meantime. As well as planning on purchasing a house earlier next year, or should I just wait until next year to look a homes?

Thanks in advance!

[Anonymous]

Hello,

I forgot to add that my two credit scores from Myfico are 769 and 750 and unknown from Experian.  I have about 15 credit cards and no debt except for Amex Credit Monitoring service which is $11 dollars a month, besides that I have no other debts.  I have not applied for anything in the last two years and I have no lates, BK or anything negative than an old student loan that was 60 days late 5 years ago. I have been working at the Federal Gov't for the last 2 1/2 years and my salary is $55,000, how much house can you afford is saying that I am able to handle a mortgage up to $220 based on salary and no debt.  I am looking for a house in Dallas, TX in the range of 100-125, 000 a year. Since it will be only me it is not necessary for a large house in Dallas in the $200-300,000 range.  On the internet I am seeing thousands of homes in my price range. Would I be wasting my time to travel to Dallas with binder in hand and look at sub-divisions and homes. Would I appear as if I would be eligible for a pre-approval?

[ShanetheMortgageMan]

With the larger banks they usually don't have a middle ground where you can just call up and go over your situation and ask if everything looks OK - it's either completing a full application and providing documentation or often just getting cursory answers to questions.  You'd want to seek out a loan officer who doesn't work in such a corporate environment/has the time to spend going over your situation top to bottom - first question you should ask is "Do you have a bit of time to help me figure out if I am on the right track to being able to qualify for a mortgage?".  Another issue may be looking at homes at this point, as unless you can find open houses or are looking at new construction, there may not be a lot of real estate agents willing to spend their time driving you around to look at homes when they know you aren't going to be buying any of them.  Open houses are free for anyone to attend and you don't need an agent to open the door for you, and builders have sales offices there all the time willing to show anyone (pre-approved or not) their homes.

What monthly payment amount are you comfortable with for a mortgage?  With a VA loana and 100% financing, a $200k home in Dallas is going to have about a $1,600/mo payment, $250k home a $2k/mo payment, and a $300k home would have a $2,400/mo payment.  $260k'ish you could safely qualify for... above that would be pushing your debt ratio.  VA prefers to have the debt ratio at 41% of your gross income, but with the aid of a computer approval debt ratios in the upper 40's (possibly even low 50's) can qualify, but that would be a large portion of your net income.  At a $250k sales price, $2k/mo payment, your debt ratio is about 43.5%.  Your credit is fine, just seems like it's a matter of the your employer transferring you.

[Anonymous]

Thank you Shane so much for the info!!!!!!!!  Since I have Navy Federal I called them up and asked them, I mistakenly thought they would inform me if I was on the right track or not.  While in Dallas, TX that is exactly what I did was look at the open houses for sub-divisions.  Yes, that was a concern that a realtor would feel as if I am wasting their time if I don't sign at the dotted line.  If I was able to transfer tomorrow I would not have a problem purchasing asap.  I have to wait for an opening at a Social Security office in Texas, in order for me to transfer. 

That is the confusing part, I am reading first time home buyer book and the different scenarios really helped me significantly!!!!!!!!!!  When you give the scenario of a $200,00 house having a $1,600 a month payment. Is that with everything included, like taxes? this is all new to me and trying to figure it out. Since this will be my first starter home and I will be living alone. I don't need to purchase a 4 bedroom/3 bath house.  Actually I was looking at home that were in the 120,000- 150,000 range.

[ShanetheMortgageMan]

Welcome.

Yes those payment examples were with everything included (property taxes & insurance, using $1,200/year for insurance & a 3% tax rate).  I misread what you typed, I see you are more interested in $100-125k-$150 sales prices, those payments (with everything) would be in the $875-$1,025-$1,250/mo range... with you easily qualifying.

VA just requires you occupy the home within 60 days of closing, so long as you have a transfer letter with the date you are transferring, then you should be good to close on a home no earlier than 60 days from that date,.

[Anonymous]

Shane,

Once again THANK YOU for the information, that would not be a problem since I am paying more than that in NYC for rent.  So as you stated previously the only thing is the transfer and taking residence within 60 days.  Once again, Thanks for everything, I know where I stand and what my next step will be. You mentioned earlier to seek a loan officer for a pre-approval, do you suggest I still seek a loan officer out for a pre-approval now. Or would you suggest I take Navy Federal advice and wait until 4 months before I am waiting to buy?

THANKS IN ADVANCE!!!!

[ShanetheMortgageMan]

You are welcome.  The credit report is only good for 90 days (120 days if it's new construction), so if you don't feel that you'd be making an offer within 120 days, then other than going through the motions, getting pre-approved top to bottom at this point wouldn't have a great benefit since the credit pull wouldn't be for anything.

[MD_chic]

Hi Mishie....I just wanted to throw in there that depending on your type of transfer from NY to TX, SSA may help you out big time. I too am with the Agency and of course if you are waiting on a hardship to move, the move is on your own, but if it's a prmotion-based relocation, SSA will pay for your closing costs for you to purchase a new home in the new duty station on top of the actual movers cost. AND, that package comes with 1% toward the loan originaltion fees meaning if the going interest rate for a 30 yr fixed FHA loan is 5%, for you it could very well be 4.25%. Granted, some of these things will have to be filed on the following years' income tax return, but it actually comes out in the wash to be ok. I did it myself and now that my home sold in my former state, I'm looking to purchase another home soon here near Headquarters.

I wish you well in your relocation! Don't be discouraged by the budgetary restrictions right now where a lot of moves are not being made/paid for, hopefully things will lighten up after the fiscal year closes.